 Corporate risk-taking: Exploring the effects of government affiliation and executives' incentivesShujun Ding, Chunxin Jia, Baozhi Qu and Zhenyu Wu Journal of Business Research, 2015, vol. 68, issue 6, 1196-1204 Abstract: A firm's risk-taking behavior can have powerful implications for its employees and shareholders, and even surrounding communities. Corporate risk-taking may associate with firms' affiliation with the government and the incentives of their highest-ranking executives, rather than with strategic choices calculated to maximize firm value. This study addresses a novel sample of Chinese firms, controls for a set of firm and manager characteristics, and finds that firms' political ranking significantly affects their corporate risk-taking behavior. This effect is strong among firms with younger managers, and becomes insignificant when the highest-ranking manager is near retirement age. The findings indicate that the political connections of the highest-ranking manager (i.e., whether the manager is a former or current government bureaucrat) do not independently affect corporate risk-taking. However, the interaction between political connections, the firm's political rank, and the manager's age can affect corporate risk-taking. Keywords: Corporate risk; Political incentives; Government-affiliated firms; Political connections (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:68:y:2015:i:6:p:1196-1204 DOI: 10.1016/j.jbusres.2014.11.014 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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