Corporate governance and risk-taking in New Zealand

Hardjo Koerniadi, Chandrasekhar Krishnamurti and Alireza Tourani-Rad
Additional contact information
Hardjo Koerniadi: Department of Finance, Auckland University of Technology, New Zealand

Australian Journal of Management, 2014, vol. 39, issue 2, 227-245

Abstract: We analyse the impact of firm-level corporate governance practices on the riskiness of a firm’s stock returns in a setting that can be considered as less conducive to managerial risk-taking. Our empirical evidence, based on a comprehensive sample of New Zealand firms, shows that firms with large boards are associated with lower levels of risk-taking, ceteris paribus. Furthermore, our results indicate that multiple large shareholders facilitate higher levels of risk-taking by the firm. Finally, our results also show that concentrated shareholdings of inside directors have a negative relation to risk-taking. Our findings are robust to controls for the three potential sources of endogeneity. Since prior work documents results consistent with the view that institutional and market environments largely determine governance outcomes, our work has implications for managers, investors and policy makers, particularly in less developed capital markets with weaker corporate takeover regimes and less performance-oriented managerial compensation.

Keywords: Corporate governance; New Zealand; risk-taking; stock return variability (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0312896213478332 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:39:y:2014:i:2:p:227-245

DOI: 10.1177/0312896213478332

Access Statistics for this article

More articles in Australian Journal of Management from Australian School of Business
Bibliographic data for series maintained by SAGE Publications ().