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Board size, social trust, and corporate risk taking: Evidence from China

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  • Kun Su
  • Heng Liu
  • Han Zhang

Abstract

This paper examines the relationship between board size and corporate risk taking, as well as the moderating effects of regional‐level social trust. Results show that larger boards have greater difficulty in achieving consensus on extreme decisions and thus tend to reduce firm risk taking in a Chinese context. Moreover, social trust had a significant moderating effect on the relationship between board size and corporate risk taking. This study contributes to the risk taking literature by testing the board size‐risk taking linkage in a Chinese context and offering an explanation based on internal board governance and external informal institution heterogeneity.

Suggested Citation

  • Kun Su & Heng Liu & Han Zhang, 2019. "Board size, social trust, and corporate risk taking: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(6), pages 596-609, September.
    • Handle: RePEc:wly:mgtdec:v:40:y:2019:i:6:p:596-609
    DOI: 10.1002/mde.3030
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    Cited by:

    1. Jin, Yige & Dong, Nanyan & Tian, Gaoliang & Zhang, Junrui, 2023. "Wisdom of the masses: Employee education and corporate risk taking," Economic Modelling, Elsevier, vol. 118(C).
    2. Umar Habibu Umar & Muhamad Abduh & Mohd Hairul Azrin Besar, 2023. "Standalone risk management committee, risk governance diversity and Islamic bank risk-taking," Risk Management, Palgrave Macmillan, vol. 25(3), pages 1-23, September.
    3. Song, Ciji & Nahm, Abraham Y. & Song, Zengji, 2021. "Entrepreneurs' hobbies and corporate risk taking: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 77(C).
    4. Wafa Tariq Waqar, 2020. "Board size and acquisition outcome: The moderating role of home country formal institutional development," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 529-541, June.
    5. Jungwon Min, 2020. "Does social trust slow down or speed up the transmission of COVID-19?," PLOS ONE, Public Library of Science, vol. 15(12), pages 1-19, December.
    6. Ziyu Guo & Gang Chen & Yang Ding, 2023. "Innovation-Driven Policies, Corporate Governance Structure and Total Factor Productivity in Chinese Sports Sector: Evidence from Listed Sports Firms," Sustainability, MDPI, vol. 15(8), pages 1-16, April.
    7. Pu, Guifang & Xie, Yanxiang & Wang, Kai, 2023. "Board faultlines and risk-taking," Finance Research Letters, Elsevier, vol. 51(C).
    8. Henrique Castro Martins, 2020. "The Brazilian bankruptcy law reform, corporate ownership concentration, and risk‐taking," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 562-573, June.

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