Does reputation matter for firm risk in developing country?

Brahmana, Rayenda Khresna and Hui-Wei, You and Evan, Lau (2020) Does reputation matter for firm risk in developing country? International Journal of Finance & Economics. pp. 1-14. ISSN 1099-1158

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Official URL: https://onlinelibrary.wiley.com/doi/full/10.1002/i...

Abstract

This research examines the effect of corporate reputation for firm risk in a developing country for a sample of 256 Indonesia firms for the period 2011–2015. Using two-step generalized method of moments approach, this research documents five important findings: (a) firm with higher reputation exhibits lower total risk (stock return volatility) and lower tail risk, yet, no significant effect on default risk; (b) Firms with high leverage use reputation effect for less total risk, tail risk, and default risk; (c) Firms with low leverage only enjoy the reputation effect on less total risk, but no reputation effect on tail risk and default risk; (d) Firms with high profitability utilize reputation to reduce the tail risk and default risk; and (f ) firm with low profitability has less tail risk when their reputation is high. This evidence contributes to the literature by uncovering important and previously unidentified determinants of risk, namely, reputation. It offers an insight to stakeholders that reputation does matter.

Item Type: Article
Uncontrolled Keywords: corporate reputation, corporate strategy, extreme risk, financial risk, total risk.
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Depositing User: Gani
Date Deposited: 06 Apr 2022 02:56
Last Modified: 06 Apr 2022 02:56
URI: http://ir.unimas.my/id/eprint/38229

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