Is Co-Ownership with the Wife a Risk Mitigator?
54 Pages Posted: 20 Nov 2018 Last revised: 9 Sep 2019
Date Written: September 7, 2019
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
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