Corporate governance effects on market volatility:empirical evidence from portuguese listed firms

Teodósio, João; Madaleno, Mara; Vieira, Elisabete

http://hdl.handle.net/10400.15/4053

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Authors

Teodósio, João

Madaleno, Mara

Vieira, Elisabete

Abstract(s)

Purpose This study examines the relationship between internal corporate governance mechanisms and firm risk-taking. Design/methodology/approach This research comprises a sample of 38 non-financial Portuguese firms listed on Euronext Lisbon, over the period from 2007 to 2017. To test the formulated hypotheses we use panel-corrected standard errors (PCSE) models. Findings Our results provide evidence that, in the Portuguese context, bigger and younger firms, with larger boards of directors and a greater number of independent directors, present higher levels of systematic risk. Our results are consistent across the robustness checks. Originality/value To the best of our knowledge, this is the first time that a robust incremental effect of board size on firm systematic risk is reported. This result contradicts the prevailing literature and opens up a new debate, from a financial markets viewpoint, on the benefits of larger boards of directors in terms of mitigating market volatility.

Keywords

Directors Board Volatility Stock returns Independence

URI

http://hdl.handle.net/10400.15/4053

Citation

Teodósio, J., Madaleno, M. & Vieira, E. (2022). Corporate governance effects on market volatility:empirical evidence from portuguese listed firms. Revista Brasileira de Gestão de Negócios, 24 (1), 159-174. doi:10.7819/rbgn.v24i1.4156