Corporate governance and risk-taking in New Zealand

Koerniadi, Hardjo and Krishnamurti, Chandrasekhar and Tourani-Rad, Alireza (2014) Corporate governance and risk-taking in New Zealand. Australian Journal of Management, 39 (2). pp. 227-245. ISSN 0312-8962

Abstract

We analyse the impact of firm level corporate governance practices on the riskiness of a firm’s stock returns in a setting that can be considered as less conducive to managerial risk-taking. Our empirical evidence, based on a comprehensive sample of New Zealand firms, shows that firms with large boards are associated with lower levels of risk taking, ceteris paribus. Furthermore, our results indicate that multiple large shareholders facilitate higher levels of risk taking by the firm. Finally, our results also show that concentrated shareholdings of inside directors have a negative relation to risk taking. Our findings are robust to controls for the three potential sources of endogeneity. Since prior work documents results consistent with the view that institutional and market environments largely determine governance outcomes, our work has implications for managers, investors and policy makers particularly in less developed capital markets with weaker corporate takeover regimes and less performance oriented managerial compensation.


Statistics for USQ ePrint 26774
Statistics for this ePrint Item
Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Published Version restricted in accordance with publisher copyright policy (Sage)
Faculty / Department / School: Current - Faculty of Business, Education, Law and Arts - School of Commerce
Date Deposited: 12 Mar 2015 21:03
Last Modified: 23 Apr 2015 06:38
Uncontrolled Keywords: corporate governance, risk taking, stock return variability, New Zealand
Fields of Research : 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150201 Finance
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
Identification Number or DOI: 10.1177/0312896213478332
URI: http://eprints.usq.edu.au/id/eprint/26774

Actions (login required)

View Item Archive Repository Staff Only