Is Co-Ownership with the Wife a Risk Mitigator?

54 Pages Posted: 20 Nov 2018 Last revised: 9 Sep 2019

See all articles by Yue Pan

Yue Pan

Xiamen University - School of Economics

Jinli Xiao

Xiamen University - School of Management

Vincent Yao

Georgia State University - J. Mack Robinson College of Business

Jian Zhang

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences

Date Written: September 7, 2019

Abstract

We examine the impact of marital co-ownership with the wife on firm risk taking based on a sample of Chinese publicly listed family firms. We find that firms exhibit lower stock return volatility under marital co-ownership. Placebo analysis suggests that the lower risk reflects women's general innate risk aversion and the advantage of the couple's group decision setting. We address the endogeneity issue using both difference-in-differences and instrumental variable approaches. The risk reduction under marital co-ownership is stronger in industries with a high female concentration, when the family is under majority shareholder pressure, and when the wife has more economic power than the husband. Our results indicate that women’s empowerment in corporate decision making and consideration in family legacy play important roles in risk setting.

Keywords: Gender, Risk taking, Family firm, Family legacy, Cultural norms, Marriage market

JEL Classification: D10, G31, G32, J16

Suggested Citation

Pan, Yue and Xiao, Jinli and Yao, Vincent and Zhang, Jian, Is Co-Ownership with the Wife a Risk Mitigator? (September 7, 2019). Available at SSRN: https://ssrn.com/abstract=3262327 or http://dx.doi.org/10.2139/ssrn.3262327

Yue Pan

Xiamen University - School of Economics ( email )

China

Jinli Xiao

Xiamen University - School of Management ( email )

No.422 Siming Nan Road
Xiamen, Fujian 361005
China

Vincent Yao

Georgia State University - J. Mack Robinson College of Business ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Jian Zhang (Contact Author)

Hong Kong Baptist University (HKBU) - Department of Finance and Decision Sciences ( email )

Hong Kong

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