dc.description.abstract | In recent years, there were a large number of business scandals, which make the public takes the issue of corporate governance seriously. Therefore, there is an extraordinary improvement in the rights of shareholders, the responsibilities of the board and information transparency in Taiwan. However, according to stakeholder theory which was proposed by Freeman in 1984, besides stockholders, stakeholders which includes employees, suppliers, and the public also have possession of the company. Accordingly, besides maximizing stockholders’ wealth, the corporate has to attach importance to the right of stakeholders. Consequently, the concept of corporate social responsibility was coming in gradually. The purpose of this thesis is to study the influence of corporate governance and corporate social responsibility on idiosyncratic volatility. Furthermore, the aim of this study is to examine whether there is differences in the influence of corporate social responsibility on idiosyncratic risk under different levels of corporate governance.
The data of this study are Taiwanese listed companies during the period of 2007 to 2014. We measure idiosyncratic risk by the measures of Xu and Malkiel (2003) and Ferreira and Laux (2007) separately. In addition, we use divergence between control rights and cash flow rights, the stock-on-pledge ratio among directors and supervisors, institutional investors’ shareholdings, divergence between the seat-control rights and cash flow rights, the percentage of independent directors and supervisors on the board, CEO serving as the chairman, and information transparency as variables of corporate governance to discuss its relationship with corporate social responsibility and idiosyncratic risk.
If we use idiosyncratic risk which is measured by the methodology of Xu and Malkiel (2003) as the dependent variable, divergence between control rights and cash flow rights, information transparency, and corporate social responsibility would have significant negative effect on idiosyncratic risk. Besides, if the company’s institutional investors’ shareholdings and or the percentage of independent directors and supervisors on the board is higher, corporate social responsibility’s negative effect on idiosyncratic risk would become smaller. If we use idiosyncratic risk which is measured by the methodology of Ferreira and Laux (2007) as the dependent variable, divergence between control rights and cash flow rights would have significant negative effect on idiosyncratic risk. In addition, the stock-on-pledge ratio among directors and supervisors and institutional investors’ shareholdings would have significant positive effect on idiosyncratic risk. | en_US |