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Operational risk and its determinants among five companies in manufacturing industry in Germany

Author

Listed:
  • Cipriano, Nur Alisha Arfiffy
  • Zulkeflee, Nur Nabila
  • Amran, Fasihah
  • Shahudin, Haziah Aishah

Abstract

Operational risk management is an important aspect in an organization to manage operational risk efficiently. Hence, this study intended to investigate the effects of internal and external factor in manufacturing industry towards operational risk. This study employs time series regression analysis of manufacturing industry in Germany from 2012 to 2016. The analysis shows that firm specific factors (average current ratio and average collection period) and macroeconomic factors (the company’s beta) influence the operational risk of the company. This study suggests the company to manage their average collection period by managing their account receivable efficiently through establishing clear credit policies and incorporate more corporate governance elements such as accountability, fairness, independence and transparency.

Suggested Citation

  • Cipriano, Nur Alisha Arfiffy & Zulkeflee, Nur Nabila & Amran, Fasihah & Shahudin, Haziah Aishah, 2018. "Operational risk and its determinants among five companies in manufacturing industry in Germany," MPRA Paper 87013, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:87013
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    File URL: https://mpra.ub.uni-muenchen.de/87013/1/MPRA_paper_87013.pdf
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    More about this item

    Keywords

    Operational risk; Average collection period; corporate governance;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • 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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