Idiosyncratic Risk and Corporate Governance: An Empirical Analysis of Australian Listed Firms.

Abstract

The primary focus of this study is on the relationship between idiosyncratic risk and corporate governance, and the first research question is based on this. A secondary focus of the study is on the relationship between firm performance and corporate governance, and the second research question is based on this. Then, a potential corporate governance-to-idiosyncratic volatility-to-firm performance link is considered. In this study, corporate governance is approached in the context of internal governance controls, based on board structure and composition, and also ownership and ownership structure. These are essential elements of corporate governance, and relevant for studies pertaining to a market with internal-governance-control characteristics, such as the Australian market.