Firm supervisory board during pandemic
Are they still trusted?
Keywords:
COVID-19, emerging market, firm value, good corporate, governance, Indonesia, pandemic, supervisory boardAbstract
This study investigates public trust in the firm supervisory board, an essential indicator of good corporate governance in some literature. By using 474 non-financial entities in Indonesia during the COVID-19 pandemic and considering a number of firm fundamental factors, this study documents evidence of irrational investor behavior during the pandemic. Investors seem to panic and respond negatively to financial information. However, the public still believes in the independent supervisory board's contribution to the firm. This effect is getting stronger with the presence of an increasingly dominant supervisory board. These results are still robust during repeated testing. This empirical evidence is useful to regulators in emerging markets, industry, and academia.
Downloads
References
ACGA. (2019). Corporate Governance Watch 2018, Hard Decisions: Asia Faces Tough Choices in CG Reform.
ACGA. (2021). Corporate Governance Watch 2020: Australia Ranks No.1 by Market; Material and Capital Goods Best Performing Sector.
Al-Awadhi, A. M., Alsaifi, K., Al-Awadhi, A., & Alhammadi, S. (2020). Death and contagious infectious diseases: Impact of the COVID-19 virus on stock market returns. Journal of behavioral and experimental finance, 27, 100326. https://doi.org/10.1016/j.jbef.2020.100326
Anderson, R. C., Mansi, S. A., & Reeb, D. M. (2004). Board characteristics, accounting report integrity, and the cost of debt. Journal of accounting and economics, 37(3), 315-342. https://doi.org/10.1016/j.jacceco.2004.01.004
Banz, R. W. (1981). The relationship between return and market value of common stocks. Journal of financial economics, 9(1), 3-18. https://doi.org/10.1016/0304-405X(81)90018-0
Chen, C. J., Lin, B. W., Lin, Y. H., & Hsiao, Y. C. (2016). Ownership structure, independent board members and innovation performance: A contingency perspective. Journal of Business Research, 69(9), 3371-3379. https://doi.org/10.1016/j.jbusres.2016.02.007
Chen, M. H., Jang, S. S., & Kim, W. G. (2007). The impact of the SARS outbreak on Taiwanese hotel stock performance: an event-study approach. International Journal of Hospitality Management, 26(1), 200-212. https://doi.org/10.1016/j.ijhm.2005.11.004
Dercon, B. (2007). Corporate governance after the Asian crisis: Querying the Indonesian environment. Managerial Law.
Ding, W., Levine, R., Lin, C., & Xie, W. (2021). Corporate immunity to the COVID-19 pandemic. Journal of Financial Economics, 141(2), 802-830. https://doi.org/10.1016/j.jfineco.2021.03.005
Donadelli, M., Kizys, R., & Riedel, M. (2017). Dangerous infectious diseases: Bad news for Main Street, good news for Wall Street?. Journal of Financial Markets, 35, 84-103. https://doi.org/10.1016/j.finmar.2016.12.003
Gafoor, C. A., Mariappan, V., & Thyagarajan, S. (2018). Board characteristics and bank performance in India. IIMB management review, 30(2), 160-167. https://doi.org/10.1016/j.iimb.2018.01.007
Ichev, R., & Marin?, M. (2018). Stock prices and geographic proximity of information: Evidence from the Ebola outbreak. International Review of Financial Analysis, 56, 153-166. https://doi.org/10.1016/j.irfa.2017.12.004
Irwanti, N. P. P. W., & Ratnadi, N. M. D. (2021). Good corporate governance moderate the effect of financial performance on firm value. International Research Journal of Management, IT and Social Sciences, 8(1), 91-101. https://doi.org/10.21744/irjmis.v8n1.1117
Kustina, K.T., Dewi, G.A.A.O., Prena, G.D., Suryasa, W. (2019). Branchless banking, third-party funds, and profitability evidence reference to banking sector in indonesia. Journal of Advanced Research in Dynamical and Control Systems, 11(2), 290-299.
Maemunah, S., & Cuaca, H. (2021). Influence of epidemic COVID–19 on business strategy, information technology and supply chain agility to firm performance in medical device industry. Linguistics and Culture Review, 5(S1), 661-669. https://doi.org/10.21744/lingcure.v5nS1.1452
Rismayani, R., Wahyuningtyas, R., & Disastra, G. M. (2021). Resource-based framework for assessing cooperative institutional’s global competitiveness as small medium enterprise (SME). Linguistics and Culture Review, 5(S1). https://doi.org/10.21744/lingcure.v5nS1.1723
Simon, H. A. (1955). A behavioral model of rational choice. The quarterly journal of economics, 69(1), 99-118.
Sugosha, M. J., & Artini, L. G. S. (2020). The role of profitability in mediating company ownership structure and size of firm value in the pharmaceutical industry on the Indonesia stock exchange. International Research Journal of Management, IT and Social Sciences, 7(1), 104-115. https://doi.org/10.21744/irjmis.v7n1.827
Tjahjadi, B., Soewarno, N., & Mustikaningtiyas, F. (2021). Good corporate governance and corporate sustainability performance in Indonesia: A triple bottom line approach. Heliyon, 7(3), e06453. https://doi.org/10.1016/j.heliyon.2021.e06453
Viswanathan, L., & Maheswaran, S. (2019). Back to normal? A study of the behaviour of volatility in the Indian stock market. IIMB Management Review, 31(1), 63-70. https://doi.org/10.1016/j.iimb.2018.08.005
Wong, G. (2008). Has SARS infected the property market? Evidence from Hong Kong. Journal of Urban Economics, 63(1), 74-95. https://doi.org/10.1016/j.jue.2006.12.007
Zhu, J., Ye, K., Tucker, J. W., & Chan, K. J. C. (2016). Board hierarchy, independent directors, and firm value: Evidence from China. Journal of Corporate Finance, 41, 262-279. https://doi.org/10.1016/j.jcorpfin.2016.09.009
Published
How to Cite
Issue
Section
Copyright (c) 2021 Linguistics and Culture Review
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
