International Evidence About the Influence of Large Shareholders on Corporate Risk Taking

Forthcoming in Revista Española de Financiación y Contabilidad (Spanish Journal of Finance & Accounting)

Posted: 31 May 2013

See all articles by Jose Maria Diez Esteban

Jose Maria Diez Esteban

University of Burgos

Conrado Diego García-Gómez

University of Valladolid

Félix J. López-Iturriaga

University of Valladolid - Department of Financial Economics and Accounting; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Date Written: May 29, 2013

Abstract

This paper analyzes the relationship between ownership structure (shareholders’ stake and identity) and corporate risk taking for a sample of companies from 21 OECD countries for the period 2000-2008. Our main contribution is considering simultaneously the effect of growth opportunities and the institutional environment. Our results suggest that growth opportunities create incentives to the largest shareholder to take (avoid) risk when the firm has (does not have) growth opportunities. We also find a trend to the alignment of interests between the largest shareholder and the other large shareholders, so that the latter support the risk policy of the former. Finally, the identity of the largest shareholder is relevant, being family firms the least prone to excessive corporate risk exposure.

Keywords: ownership structure, corporate risk taking, institutional setting

JEL Classification: G32, G34

Suggested Citation

Diez Esteban, Jose Maria and García-Gómez, Conrado Diego and Lopez-Iturriaga, Felix Javier, International Evidence About the Influence of Large Shareholders on Corporate Risk Taking (May 29, 2013). Forthcoming in Revista Española de Financiación y Contabilidad (Spanish Journal of Finance & Accounting). Available at SSRN: https://ssrn.com/abstract=2271558 or http://dx.doi.org/10.2139/ssrn.2271558

Jose Maria Diez Esteban

University of Burgos ( email )

Hospital del Rey, s/n
Burgos, 09001
Spain

Conrado Diego García-Gómez

University of Valladolid ( email )

Calle Universidad, s/n
42004 Soria
Spain

Felix Javier Lopez-Iturriaga (Contact Author)

University of Valladolid - Department of Financial Economics and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

HOME PAGE: http://www2.eco.uva.es/flopez

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

Register to save articles to
your library

Register

Paper statistics

Abstract Views
599
PlumX Metrics