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

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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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    References listed on IDEAS

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    1. Waeibrorheem Waemustafa & Suriani Sukri, 2016. "Systematic and Unsystematic Risk Determinants of Liquidity Risk Between Islamic and Conventional Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1321-1327.
    2. Guillermo Larraín & Helmut Reisen & Julia von Maltzan, 1997. "Emerging Market Risk and Sovereign Credit Ratings," OECD Development Centre Working Papers 124, OECD Publishing.
    3. Brachinger, Hans Wolfgang, 2006. "Euro or “Teuro”?: The Euro-induced Perceived Inflation in Germany," DQE Working Papers 5, Department of Quantitative Economics, University of Freiburg/Fribourg Switzerland.
    4. Ahmed Arif & Ahmed Nauman Anees, 2012. "Liquidity risk and performance of banking system," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 20(2), pages 182-195, May.
    5. Khalil, Nur Syafiqah, 2017. "Firm Risk and Performance: The Role of Corporate Governance in Hwa Tai Sdn Bhd," MPRA Paper 78510, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Operational risk; Average collection period; corporate governance;
    All these keywords.

    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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