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Crisis Propagation and Governance

Author

Listed:
  • Hanene Ezzine

    (FSEG - Université de Sfax - University of Sfax)

  • Bernard Olivero

    (CRIFP - Centre de Recherche en Ingénierie Financière et Finances Publiques - UNS - Université Nice Sophia Antipolis (1965 - 2019))

  • Ridha Shabou

    (FSEG - Université de Sfax - University of Sfax)

Abstract

Following the appearance of the recent scandals, the question of the efficiency of the corporate governance mechanisms to appease the financial crisis can be raised. The purpose of this paper is to study the impact of the board of directors effectiveness on the firm's ability to resist the Asian stock market crisis. The firm ability to resist the Asian stock market crisis is assessed by minimization of financial return's conditional volatility estimated by ARCH and GARCH models. Using a data from 94 listed and industrial firms in four East Asian countries: Malaysia, Thailand, Indonesia, and the Philippines between 1996 and 1998, we find that the board size and the presence of the outside directors are negatively linked to the financial return's conditional volatility. This result seems to be compatible with the argument which supposes that the efficient boards can increase the ability to control the managers and the capability of firms to resist the crisis. The leadership structure would be without effect on the resistance to the crisis and the CEO turnover would have a positive effect on the financial return's conditional volatility.

Suggested Citation

  • Hanene Ezzine & Bernard Olivero & Ridha Shabou, 2009. "Crisis Propagation and Governance," Post-Print halshs-00455743, HAL.
    • Handle: RePEc:hal:journl:halshs-00455743
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00455743
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    References listed on IDEAS

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