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Do Internal Corporate Governance Practices Influence Stock Price Volatility? Evidence from Egyptian Non-Financial Firms

Author

Listed:
  • Mohamed Sherif

    (College of Management and Technology, Arab Academy for Science, Technology & Maritime Transport, Cairo P.O. Box 2033, Egypt)

  • Doaa El-Diftar

    (College of Management and Technology, Arab Academy for Science, Technology & Maritime Transport, Cairo P.O. Box 2033, Egypt)

  • Tamer Shahwan

    (Department of Management, Faculty of Commerce, Zagazig University, Zagazig 44519, Egypt)

Abstract

The objective of this research paper is to investigate the association between internal Corporate Governance (CG) mechanisms and stock price volatility in Egypt as an emerging market. The paper investigates the impact of ownership structure and board structure as internal CG mechanisms on stock price volatility. Data are analyzed using a two-way fixed effects model, a one-step dynamic panel data model, and a panel weighted least squares model. The study concluded that ownership concentration has a negative influence on volatility. Interestingly, an inverted U-shaped relationship between the percentage of ownership by the greatest shareholder and volatility is evidenced. Managerial ownership also showed a negative influence on volatility. As for board structure mechanisms, the findings show that both board size and frequency of board meetings negatively influence volatility, whereas board independence has a positive impact.

Suggested Citation

  • Mohamed Sherif & Doaa El-Diftar & Tamer Shahwan, 2024. "Do Internal Corporate Governance Practices Influence Stock Price Volatility? Evidence from Egyptian Non-Financial Firms," JRFM, MDPI, vol. 17(6), pages 1-26, June.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:6:p:243-:d:1412542
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    References listed on IDEAS

    as
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    6. Sunday Ogbeide & Esther Ikavbo Evbayiro-Osagie, 2019. "Corporate Governance Mechanisms And Share Price Volatility Of Quoted Firms: Insights From Nigeria," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 8(1), pages 50-58.
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