Multiple Large Shareholders and Corporate Risk-Taking: Evidence from French Family Firms
European Financial Management, Forthcoming
52 Pages Posted: 26 Dec 2015 Last revised: 13 Jan 2016
Date Written: December 25, 2015
We investigate the role of multiple large shareholders (MLS) in corporate risk-taking. Using a sample of publicly listed French family firms over the period 2003-2012, we show that the presence, number, and voting power of MLS are associated with higher risk-taking. Our results suggest that MLS help restrain the propensity of family owners to undertake low-risk investments. This effect is much stronger in firms that are more susceptible to agency conflicts. The results highlight the important governance role played by MLS in family firms and may explain why MLS are associated with higher firm performance.
Keywords: Risk-taking, Ownership structure, Family firms, Private benefits of control, Contestability, Corporate governance
JEL Classification: G30, G32, G34
Suggested Citation: Suggested Citation