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The influence of corporate governance on financial derivatives decisions

This study investigates corporate governance risk behavior around the financial crises period and its sensitivity to varying levels of financial constraints. The study employs simultaneous-equations methodology to examine firms’ capital structure and derivatives usage decisions simultaneously. The s...

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Main Authors: Tashfeen, Rubeena, Mahmood, Tashfeen, Mustafa, Faisal, Khursheed, Ambreen
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2022
Online Access:http://journalarticle.ukm.my/21355/1/The%20Influence%20of%20Corporate%20Governance%20on%20Financial%20Derivatives%20Decisions.pdf
http://journalarticle.ukm.my/21355/
https://ejournals.ukm.my/jem/
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spelling my-ukm.journal.213552023-03-17T08:12:21Z http://journalarticle.ukm.my/21355/ The influence of corporate governance on financial derivatives decisions Tashfeen, Rubeena Mahmood, Tashfeen Mustafa, Faisal Khursheed, Ambreen This study investigates corporate governance risk behavior around the financial crises period and its sensitivity to varying levels of financial constraints. The study employs simultaneous-equations methodology to examine firms’ capital structure and derivatives usage decisions simultaneously. The sample is split into high and low levels of financial risk to examine impacts of corporate governance on decisions regarding usage of derivatives under both conditions. Further, quantile analysis is preformed to investigate governance responses at different levels of risk. We observe that corporate governance responses vary with the levels of distress. At lower levels, insider shareholders, Chief Executive Officer (CEO) salary, and CEO age influence financial derivatives decisions. However, institutional shareholders, audit committee meetings, CEO bonus and other compensation consistently impact derivatives decisions, irrespective of the level of financial distress. The study suggests that governance mechanisms vary with financial distress levels. Firms could optimally structure their governance mechanisms accordingly. The study shows it is important to incorporate levels of risk in any corporate governance study. Penerbit Universiti Kebangsaan Malaysia 2022 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/21355/1/The%20Influence%20of%20Corporate%20Governance%20on%20Financial%20Derivatives%20Decisions.pdf Tashfeen, Rubeena and Mahmood, Tashfeen and Mustafa, Faisal and Khursheed, Ambreen (2022) The influence of corporate governance on financial derivatives decisions. Jurnal Ekonomi Malaysia, 56 (2). pp. 29-46. ISSN 0127-1962 https://ejournals.ukm.my/jem/
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description This study investigates corporate governance risk behavior around the financial crises period and its sensitivity to varying levels of financial constraints. The study employs simultaneous-equations methodology to examine firms’ capital structure and derivatives usage decisions simultaneously. The sample is split into high and low levels of financial risk to examine impacts of corporate governance on decisions regarding usage of derivatives under both conditions. Further, quantile analysis is preformed to investigate governance responses at different levels of risk. We observe that corporate governance responses vary with the levels of distress. At lower levels, insider shareholders, Chief Executive Officer (CEO) salary, and CEO age influence financial derivatives decisions. However, institutional shareholders, audit committee meetings, CEO bonus and other compensation consistently impact derivatives decisions, irrespective of the level of financial distress. The study suggests that governance mechanisms vary with financial distress levels. Firms could optimally structure their governance mechanisms accordingly. The study shows it is important to incorporate levels of risk in any corporate governance study.
format Article
author Tashfeen, Rubeena
Mahmood, Tashfeen
Mustafa, Faisal
Khursheed, Ambreen
spellingShingle Tashfeen, Rubeena
Mahmood, Tashfeen
Mustafa, Faisal
Khursheed, Ambreen
The influence of corporate governance on financial derivatives decisions
author_facet Tashfeen, Rubeena
Mahmood, Tashfeen
Mustafa, Faisal
Khursheed, Ambreen
author_sort Tashfeen, Rubeena
title The influence of corporate governance on financial derivatives decisions
title_short The influence of corporate governance on financial derivatives decisions
title_full The influence of corporate governance on financial derivatives decisions
title_fullStr The influence of corporate governance on financial derivatives decisions
title_full_unstemmed The influence of corporate governance on financial derivatives decisions
title_sort influence of corporate governance on financial derivatives decisions
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2022
url http://journalarticle.ukm.my/21355/1/The%20Influence%20of%20Corporate%20Governance%20on%20Financial%20Derivatives%20Decisions.pdf
http://journalarticle.ukm.my/21355/
https://ejournals.ukm.my/jem/
_version_ 1761617592610455552
score 13.211869

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