Impact of Corporate Governance Mechanisms on Total, Systematic, Market, and Insolvency Risk of Fintech

Abstract: Corporate governance practices of fintech companies have caused to increase in risk or caused to decrease in the risks. This study is mainly focused to identify the impact of corporate governance mechanisms, especially board structure and ownership structure, on the market-based risk of fintech companies. We have employed several corporate governance mechanisms such as, board size, board independence, board expertise on fintech, CEO duality, risk committee functioning, institutional ownership, and managerial ownership of the fintech companies. Total risk, systematic risk, market risk,and insolvency risk are employed as our dependent variables to examine this phenomenon. We have selected 46 listed fintech companies that are listed in any stock market of the world. Data is collected through 2012-2022 period. We have conducted our analysis using 369 unbalanced panel datasets. Our purpose was to emphasize the importance of better corporate governance mechanisms to risk management in fintech companies. From the management point of view, investors’ point of view, or directors’ point of view, what changes should do to better risk management of the company and also their personal benefit? In the recent past, two bluechip fintech companies have bankrupt due to corporate governance mispractices and risk management issues. Our results show that, corporate governance is one of the key factors in determining risk of the fintech companies. We have identified that the best practices caused to decrease risk while mispractices caused to increase risk.