BCO and solvency risk (regression results) (IMAGE)
Caption
The results of both fixed and random-effects models are presented in it. The regression results show that the statistical relationship between Cooption and z-score is negative and highly significant for both fixed-effects and random-effects models. This implies that the risk of solvency measured through Z-score is directly related to increased coopted board directors. A unit increase in cooption increases default risk by 1.473 units for fixed effects model and 1.012 units for random-effects model. These results for Australia and New Zealand banking sector corroborate with findings of Brogi and Lagasio (2022), Coles et al. (2014), Baghdadi et al. (2020) and Addo et al. (2021) which exhibit the same scenario for United States and European banking sector, where cooption enhance risk for banks and firms. It also shows the generalizability and applicability of our econometric model. Further it adds to applicability of theory of cooption to various geographic location like Australia and New Zealand around the globe.
Credit
Khalil ur Rahman (National University of Computer and Emerging Sciences – Lahore Campus, Pakistan) Mian Muhammad Atif and Akbar Azam (National University of Computer and Emerging Sciences – Lahore Campus, Pakistan)
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