Corporate Risk-Taking in Privatized Firms: International Evidence on the Role of State and Foreign Owners

Narjess Boubakri, Jean-Claude Cosset and Walid Saffar

Cahiers de recherche from CIRPEE

Abstract: Using a unique database of 190 newly privatized firms from 36 countries, we investigate the impact of shareholders’ identify on corporate risk-taking behavior. We find strong and robust evidence that state (foreign) ownership is negatively (positively) related to corporate risk-taking. Moreover, we find that these relations depend on the level of government extraction. Our results suggest that relinquishment of government control, openness to foreign investment, and improvement of country-level governance institutions are key factors in the success of privatization reform.

Keywords: Privatization; risk-taking; corporate governance (search for similar items in EconPapers)
JEL-codes: G31 G34 L33 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:1110

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