Pyramidal structure, riskâ€ taking and firm value: Evidence from Chinese local SOEs
Rui Wan and
Victor Y. Song
The Economics of Transition, 2018, vol. 26, issue 3, 401-427
This article investigates the relationship among pyramidal layers, riskâ€ taking and firm value using a sample of local stateâ€ owned enterprises (SOEs) in China. We find that stateâ€ pyramidal layers have a positive and significant impact on firm riskâ€ taking and firm value, suggesting that the pyramidal structure formed by the state protects SOEs from political intervention. Riskâ€ taking is conducive to enhancing firm value and is one of the important channels through which stateâ€ pyramidal layers increase firm value. By exploring the role of stateâ€ pyramidal organizational structures in improving SOEs' riskâ€ taking, our results contribute to both corporate governance and corporate finance literature.
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Persistent link: https://EconPapers.repec.org/RePEc:bla:etrans:v:26:y:2018:i:3:p:401-427
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