From Fundamentals to Risk Control: Exploring the Link Between Quality Indicators and Downside Risk

This study aimed to explore the interactions between corporate quality and downside risk. We identified the bidirectional causality through Granger causality test, then employed lagged one period panel data regressions. The empirical results revealed that all downside risk measures exhibited consistent explanatory power in corporate quality and remained robust under different parameters settings and GMM tests. This study contributes to the literature by offering empirical evidence linking downside risk to multidimensional corporate quality in an emerging market context. Practical implications are drawn for investors, corporate managers, and policymakers aiming to enhance financial resilience, strengthen risk management, and improve market-based screening mechanisms.