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Corporate governance, risk aversion and firm value

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  • Ron Christian Antonczyk
  • Astrid Juliane Salzmann

Abstract

This study extends the current state of research on corporate governance and firm value determinants by introducing culture as a proxy for risk aversion. We focus on individuals’ risk aversion and connect it to Hofstede’s cultural dimensions of uncertainty avoidance. In a cross-country empirical analysis with 47 countries, we find that uncertainty avoidance is negatively associated with valuation of firms. Our findings suggest that cross-country variation in risk aversion as well as in corporate governance impacts firm valuation. The results are robust to controlling for other determinants of firm value and using different datasets.

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  • Ron Christian Antonczyk & Astrid Juliane Salzmann, 2014. "Corporate governance, risk aversion and firm value," Applied Financial Economics, Taylor & Francis Journals, vol. 24(8), pages 543-556, April.
    • Handle: RePEc:taf:apfiec:v:24:y:2014:i:8:p:543-556
    DOI: 10.1080/09603107.2014.892195
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