Effect of government share ownership on corporate risk taking: Case of the United Arab Emirates

Md Hamid Uddin

Research in International Business and Finance, 2016, vol. 36, issue C, 322-339

Abstract: If government holds ownership in corporate firms, principal–principal conflict may arise between government and private owners. I argue conflict aggravates when government is minority owner, because the powerful minority owner (government) exerts political pressure on the majority private owners to achieve government objectives. Hence, government minority firms are likely to be conservative in risk taking due to the existence of principal–principal conflict. I provide supporting evidence from the United Arab Emirates, which has the highest record of government ownership in stock exchange listed firms of any country. However, the relationship between government ownership and risk taking is a non-linear U-shaped.

Keywords: Government ownership; Corporate risk taking; Principal–principal conflict (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:36:y:2016:i:c:p:322-339

DOI: 10.1016/j.ribaf.2015.09.033

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