Journal of Applied Finance & Banking

The impact of financial risk on systematic risks: international evidence

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  • Abstract

     

    The study focused on the impact of the short-term and long-term financial risk on systematic risks through analyzing 120 corporations listed in the international and emerging stock exchange markets of the United States, Germany, South Korea, and Egypt, (30 corporations from each country). The variability in common stock’s systematic risks was explained by 93.58% according to short and long-term financial risk under two control variables which are market capitalization of the corporation and the efficiency of the stock exchange. When our results were compared to those of Hamada, 1972, Lee and Jang, 2007, and Alaghi, 2011, the study found that short-term financial risk increased which was explained by common stock’s systematic risk. Finally, the study found a relationship between each the short and long-term financial risk on one hand and a common stock’s systematic risk on another hand.

     

    JEL classification numbers: G32

    Keywords: Financial Risk, Systematic Risks

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