Article2024

The effect of corporate governance on financial fragility in non-financial companies: a Minskyian approach

Ibrahim Naser Khatatbeh · Hamdi W. Samman · Wasfi A. Al Salamat · Rasmi Meqbel

10 citations0/0 files storedInternational Journal of Islamic and Middle Eastern Finance and Management

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Financial Distress and Bankruptcy Prediction Corporate Governance and Financial Management

Abstract

Purpose This study aims to examine the effect of corporate governance (CG) mechanisms on financial fragility in non-financial corporations, using Nishi’s operationalization of Minsky’s financial instability hypothesis. Specifically, the study investigates the influence of board size, board independence, CEO duality and audit quality on the financial fragility of non-financial companies (NFCs). Design/methodology/approach Using a panel logit regression model, the authors analyse annual data from (66) NFCs listed on the Amman Stock Exchange, spanning over the period 2015–2021. This methodology enables us to assess the relationships between the identified CG mechanisms and the categorical proxy of financial fragility. Findings The findings of this study reveal that a large share of NFCs fall within Minsky’s “Ponzi” classification, indicating elevated levels of financial vulnerability. Remarkably, the analysis demonstrates that larger board sizes and the CEO-Chairman duality exacerbate financial fragility within these firms. Conversely, the study results suggest that board independence and audit quality exhibit limited effects on financial fragility. In addition, profitability, firm size and financial leverage are identified as key predictors of financial fragility. Originality/value This study adds to the current literature by using a financial fragility index grounded in Minsky’s financial instability hypothesis. The constructed index is then used to examine specific CG factors in relation to financial fragility, which offers new insights into the dynamics influencing the default exposure of NFCs. Furthermore, the study findings have direct implications for policymakers and stakeholders aiming to enhance CG practices and foster financial stability in the private sector.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 10 citations exist upstream.

References

1983Separation of Ownership and Control 1996Higher market valuation of companies with a small board of directors 2011Risk management, corporate governance, and bank performance in the financial crisis 1977The Financial Instability Hypothesis: An Interpretation of Keynes and an Alternative to“Standard” Theory 2004Corporate Governance and Financial Distress: evidence from Taiwan 2006Audit Firm Size and Going-Concern Reporting Accuracy 2015The effects of corporate governance on financial performance and financial distress: evidence from Egypt 2012Board structure, ownership structure and firm performance: A study of New Zealand listed-firms

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.