Corporate Governance and Risk Taking

@article{John2008CorporateGA,
  title={Corporate Governance and Risk Taking},
  author={Kose John and Lubomir P. Litov and Bernard Yeung},
  journal={Journal of Finance},
  year={2008},
  volume={63},
  pages={1679-1728}
}
Better investor protection could lead corporations to undertake riskier but value-enhancing investments. For example, better investor protection mitigates the taking of private benefits leading to excess risk-avoidance. Further, in better investor protection environments, stakeholders like creditors, labor groups, and the government are less effective in reducing corporate risk-taking for their self-interest. However, arguments can also be made for a negative relationship between investor… 

Tables from this paper

Corporate Risk Taking and Ownership Structure
This paper investigates the determinants of corporate risk taking. Shareholders with substantial equity ownership in a single company may advocate conservative investment policies due to greater
Corporate Governance and Risk Taking: Evidence from the U.K. and German Insurance Markets
We analyze the impact of factors related to corporate governance (i.e., compensation, monitoring, and ownership structure) on risk taking in the insurance industry. We measure asset, product, and
University of Birmingham Corporate governance reform and risk-taking
Existing studies suggest that stricter Corporate Governance Reform (CGR) reduces corporate risk-taking, primarily due to higher compliance costs and expanded liabilities of insiders or managers. We
Do Foreign Investors Encourage Value-Enhancing Corporate Risk Taking?
This paper examines whether foreign investors in Korea affect incentives for firms to take risks in corporate investment. The short-term focus of foreign investors encourages managers to engage in
Risk Taking and Performance of Public Insurers: An International Comparison
We investigate how investor protection, government quality, and contract enforcement affect risk taking and performance of insurance companies from around the world. We find that better investor
Corporate Governance and Risk Taking in Pension Plans: Evidence from Defined Benefit Asset Allocations
Abstract Based on theoretical advice and empirical evidence suggesting that risk taking in asset allocation enhances pension returns, we evaluate empirically whether good corporate governance leads
Corporate governance reform and risk-taking: Evidence from a quasi-natural experiment in an emerging market
Existing studies suggest that stricter Corporate Governance Reform (CGR) reduces corporate risk-taking, primarily due to higher compliance costs and expanded liabilities of insiders or managers. We
Institutions, Investor Protection, and Corporate Choices in Developing Economies
This paper examines the extent to which differences in legal tradition, judicial efficiency, and investor protection affect debt financing and risk taking across developing economies. We find that
Institutions, Investor Protection, and Corporate Choices in Developing Economies
This paper examines the extent to which differences in legal tradition, judicial efficiency, and investor protection affect debt financing and risk taking across developing economies. We find that
Creditor Rights and Corporate Risk-Taking
We propose that stronger creditor rights in bankruptcy affect corporate investment choice by reducing corporate risk-taking. In cross-country analysis, we find that stronger creditor rights induce
...
1
2
3
4
5
...

References

SHOWING 1-10 OF 77 REFERENCES
Investor Protection, Optimal Incentives, and Economic Growth
Does investor protection foster economic growth? To assess the widely held affirmative view, we introduce investor protection into a standard overlapping generations model of capital accumulation.
Why Do Countries Matter so Much for Corporate Governance
This paper develops and tests a model of how country characteristics, such as legal protections for minority investors, and the level of economic and financial development, influence firms' costs and
Investor Protection and Corporate Valuation
We present a model of the effects of legal protection of minority shareholders and of cash-f low ownership by a controlling shareholder on the valuation of firms. We then test this model using a
Law and Finance
This paper examines legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries. The results show that
Managerial Conservatism, Project Choice, and Debt
The authors show that the incentive for managers to build their reputations distorts firms' investment policies in favor of relatively safe projects, thereby aligning managers' interests with those
Equity Ownership and Firm Value in Emerging Markets
  • Karl V. Lins
  • Business
    Journal of Financial and Quantitative Analysis
  • 2003
Abstract This paper investigates whether management stock ownership and large non-management blockholder share ownership are related to firm value across a sample of 1433 firms from 18 emerging
THE EFFECT OF INTERNATIONAL INSTITUTIONAL FACTORS ON PROPERTIES OF ACCOUNTING EARNINGS
International differences in the demand for accounting income predictably affect the way it incorporates economic income (dividend-adjusted change in market value) over time. We characterize the
Investor Protection and Equity Markets
We present a simple model of an entrepreneur going public in an environment with poor legal protection of outside shareholders. The model incorporates elements of Becker's (1968) crime and
Banks and Corporate Control in Japan
Using a large sample of Japanese firm level data, we find that Japanese banks act primarily in the short term interests of creditors when dealing with firms outside bank groups. Corporate control
Law, Finance and Firm Growth
We investigate how differences in legal and financial systems affect firms' use of external financing to fund growth. We show that in countries whose legal systems score high on an efficiency index,
...
1
2
3
4
5
...