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The effects of ownership concentration and corporate governance on corporate risk-taking

Author

Listed:
  • Seksak Jumreornvong
  • Sirimon Treepongkaruna
  • Panu Prommin
  • Pornsit Jiraporn

Abstract

Purpose - This study aims to investigate the effects of ownership concentration and corporate governance on the extent of risk-taking in an important emerging economy – Thailand. Design/methodology/approach - The results are corroborated by additional analysis, including an instrumental-variable analysis and propensity score matching. Findings - Large owners are under-diversified and are thus more vulnerable to the firm’s idiosyncratic risk. Therefore, they tend to advocate less risky corporate policies and strategies. Consistent with this notion, the authors find that more concentrated ownership induces firms to take significantly less risk. Originality/value - Ownership in Thai firms is substantially more concentrated than that in developed economies, providing a unique opportunity to study the effect of highly concentrated ownership on risk-taking.

Suggested Citation

  • Seksak Jumreornvong & Sirimon Treepongkaruna & Panu Prommin & Pornsit Jiraporn, 2019. "The effects of ownership concentration and corporate governance on corporate risk-taking," Accounting Research Journal, Emerald Group Publishing Limited, vol. 33(1), pages 252-267, December.
    • Handle: RePEc:eme:arjpps:arj-09-2018-0144
    DOI: 10.1108/ARJ-09-2018-0144
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    Citations

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    Cited by:

    1. Benedict Valentine Arulanandam & Christo Selvan & Goh Xin Tong, 2023. "Critical Factors Influencing Firms' Risk-Taking Behaviour: CEO Characteristics and the Moderating Role of the Audit Committee," Central European Business Review, Prague University of Economics and Business, vol. 2023(5), pages 1-41.
    2. Takakorn Likitapiwat & Sirimon Treepongkaruna & Pornsit Jiraporn, 2023. "CSR variability, managerial risk aversion, and hostile takeover threats," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 773-790, March.

    More about this item

    Keywords

    Corporate governance; Agency theory; Risk-taking; Ownership; Instrumental variable; G32; G34;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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