Systemic risk in non financial companies: Does governance matter?
Doriana Cucinelli and
Maria Gaia Soana
International Review of Financial Analysis, 2023, vol. 87, issue C
Abstract:
The paper investigates the impact of four key corporate governance mechanisms - board, audit, compensation and ownership, and anti-takeover provisions - on the exposure and contribution to systemic risk of >400 US non-financial companies (NFCs) listed in S&P500 from 2005 to 2020. Our results show that in NFCs, unlike in banks, good corporate governance practices constrain both systemic risk exposure and contribution. We find a complementary effect between internal corporate governance mechanisms in reducing both the contribution and the exposure to systemic risk, and a substitution effect between internal and external governance practices in constraining the exposure of NFCs to systemic risk. Moreover, strong corporate governance practices are shown to constrain systemic risk both in steady-state conditions and in times of distress.
Keywords: Systemic risk; Non-financial companies; Corporate governance; Financial distress (search for similar items in EconPapers)
JEL-codes: G01 G34 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:87:y:2023:i:c:s1057521923001175
DOI: 10.1016/j.irfa.2023.102601
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