The effects of ownership concentration and corporate governance on corporate risk-taking

Seksak Jumreornvong, Sirimon Treepongkaruna, Panu Prommin and Pornsit Jiraporn

Accounting Research Journal, 2019, vol. 33, issue 1, 252-267

Abstract: Purpose - This study aims to investigate the effects of ownership concentration and corporate governance on the extent of risk-taking in an important emerging economy – Thailand. Design/methodology/approach - The results are corroborated by additional analysis, including an instrumental-variable analysis and propensity score matching. Findings - Large owners are under-diversified and are thus more vulnerable to the firm’s idiosyncratic risk. Therefore, they tend to advocate less risky corporate policies and strategies. Consistent with this notion, the authors find that more concentrated ownership induces firms to take significantly less risk. Originality/value - Ownership in Thai firms is substantially more concentrated than that in developed economies, providing a unique opportunity to study the effect of highly concentrated ownership on risk-taking.

Keywords: Corporate governance; Agency theory; Risk-taking; Ownership; Instrumental variable; G32; G34 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-09-2018-0144

DOI: 10.1108/ARJ-09-2018-0144

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