Family ownership and risk taking

Eun Jung Lee, Joon Chae and Yu Kyung Lee

Finance Research Letters, 2018, vol. 25, issue C, 69-75

Abstract: We study the relation between a controlling family's ownership and their company's risk taking behavior. By investigating comprehensive ownership data in Korea where most companies have controlling families, we find that non-linear U-shaped relation exists between family ownership and a firm's risk taking. Our results are robust in various tests considering endogeneity problems and with different proxies. We argue that a family with less ownership takes less risk for pursuing their private benefit, while a family with more ownership aligns their interest with their company's by taking more value enhancing risky projects.

Keywords: Family firm; Controlling shareholder; Risk taking (search for similar items in EconPapers)
JEL-codes: G00 G30 G32 G34 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:25:y:2018:i:c:p:69-75

DOI: 10.1016/j.frl.2017.10.010

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