Abstract
Using a unique database of 381 newly privatized firms from 57 countries, we investigate the impact of shareholders' identity 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 high risk-taking by foreign owners depends on the strength of country-level governance institutions. Our results suggest that relinquishment of government control, openness to foreign investment, and improvement of country-level governance institutions are key determining factors of corporate risk-taking in newly privatized firms.
| Original language | English |
|---|---|
| Pages (from-to) | 641-658 |
| Number of pages | 18 |
| Journal | Journal of Financial Economics |
| Volume | 108 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 1 Jun 2013 |
Keywords
- Corporate governance
- Privatization
- Risk-taking
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics
- Strategy and Management