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The impact of financial risk on systematic risks: international evidence

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  • Osama Wagdi
  • Yasmeen Tarek

Abstract

The study focused on the impact of the short-term and long-term financial risk on systematic risks through analyzing 120 corporations listed in the international and emerging stock exchange markets of the United States, Germany, South Korea, and Egypt, (30 corporations from each country). The variability in common stock’s systematic risks was explained by 93.58% according to short and long-term financial risk under two control variables which are market capitalization of the corporation and the efficiency of the stock exchange. When our results were compared to those of Hamada, 1972, Lee and Jang, 2007, and Alaghi, 2011, the study found that short-term financial risk increased which was explained by common stock’s systematic risk. Finally, the study found a relationship between each the short and long-term financial risk on one hand and a common stock’s systematic risk on another hand.  JEL classification numbers: G32

Suggested Citation

  • Osama Wagdi & Yasmeen Tarek, 2019. "The impact of financial risk on systematic risks: international evidence," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(6), pages 1-11.
    • Handle: RePEc:spt:apfiba:v:9:y:2019:i:6:f:9_6_11b
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Financial Risk; Systematic Risks;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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