Risk Governance Structure and Firm Performance: An (Exploratory) Empirical Study in Indian Context

Financial Statistical Journal

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Field Value
 
Title Risk Governance Structure and Firm Performance: An (Exploratory) Empirical Study in Indian Context
 
Creator Shivaani, M.V.
 
Subject Risk governance; ROA; ROE; Difference-GMM
 
Description The study attempts to explore the relationship between riskgovernance structureand firm performance. In perhaps the first of its kind attempt, a normative framework for risk governance structures is being put forward. Based on the framework, an index indicating strength/quality of risk governance structures is proposed. Then, the impact of risk governance structure on firm performance is gauged. To this end, the study makes use of constituents of S&P CNX500 index and covers a ten year period from April 1, 2005 to March 31, 2015.To control for potential endogeneity among variables of interest, the study makes use of a robust and reliable methodology,‘difference-GMM’. In addition, to ensure completeness of results, the study employs control variables such as recession dummy, firm’s age, size, and growth rate and leverage ratio. The results suggest that robust risk governance structures do not necessarily lead to better firm performance. In fact, risk governance index is negatively related to both ROA and ROE. The relationship is not statistically significant but has wide economic implications. A prominent implication being, mere constitution of risk management committee and appointment of CRO will not improve firm performance; regulators and companies need to ensure that governance structures are not too rigid, excessively risk averse and ineffective and inefficient in decision making. Given the simplicity and reliability of the proposed risk governance index, and the recommendations put forth in the paper, the study is expected to be of immense utility in an important yet neglected area of risk governance.
 
Publisher EnPress Publisher LLC
 
Contributor
 
Date 2018-09-05
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://systems.enpress-publisher.com/index.php/FSJ/article/view/942
10.24294/fsj.v1i4.942
 
Source Financial Statistical Journal; Vol 1, No 4 (Published)
2578-1960
10.24294/fsj.v1i4
 
Language eng
 
Relation https://systems.enpress-publisher.com/index.php/FSJ/article/view/942/605
 
Rights Copyright (c) 2018 M.V. Shivaani
http://creativecommons.org/licenses/by-nc/4.0
 

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