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Does corporate control matter to financial volatility?

Author

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  • Laura Gianfagna

    (IMT School for Advanced Studies Lucca)

  • Armando Rungi

    (IMT School for Advanced Studies Lucca)

Abstract

In our contribution we study how the ownership channel affects the stock price volatility of listed stock markets. In particular, we study how a linkage between a parent company and its affiliates may drive differences in stock price volatility, within and across countries. We exploit a worldwide dataset of stock-exchange listed firms, controlling for several financial dimensions, to assess whether business groups matter to financial volatility. The answer is positive and does not depend on the definition of volatility used. Our results contribute to the corporate finance literature by defining the role of multinational corporate control in financial markets, and to the financial stability literature by assessing corporate control as an undiscovered channel of transmission for financial shocks.

Suggested Citation

  • Laura Gianfagna & Armando Rungi, 2017. "Does corporate control matter to financial volatility?," Working Papers 09/2017, IMT School for Advanced Studies Lucca, revised Nov 2017.
    • Handle: RePEc:ial:wpaper:9/2017
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    File URL: http://eprints.imtlucca.it/3842/1/EIC_WP_9_2017.pdf
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    More about this item

    Keywords

    corporate control; stock price volatility; multilevel model;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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