The role of state and foreign owners in corporate risk-taking: Evidence from privatization

Narjess Boubakri, Jean Claude Cosset, Walid Saffar

Research output: Journal article publicationJournal articleAcademic researchpeer-review

181 Citations (Scopus)


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 languageEnglish
Pages (from-to)641-658
Number of pages18
JournalJournal of Financial Economics
Issue number3
Publication statusPublished - 1 Jun 2013


  • Corporate governance
  • Privatization
  • Risk-taking

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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