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Corporate governance and risk-taking: Evidence from Japanese firms

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  • Nguyen, Pascal

Abstract

This paper examines the influence of corporate governance on the risk taking of Japanese firms. We show that family control and ownership concentration are associated with higher idiosyncratic risk, whereas bank control has the opposite effect. Considering the link between idiosyncratic risk and firm performance, the results provide an economic rationale for the higher (lower) performance of family-controlled firms (bank-controlled firms). The results also explain the higher performance of firms with concentrated ownership by relating their governance structures to the risk-taking strategies that generate greater competitive advantages. Finally, we show that the impact of governance structures on risk taking is stronger after controlling for endogeneity.

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Bibliographic Info

Article provided by Elsevier in its journal Pacific-Basin Finance Journal.

Volume (Year): 19 (2011)
Issue (Month): 3 (June)
Pages: 278-297

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Handle: RePEc:eee:pacfin:v:19:y:2011:i:3:p:278-297

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Web page: http://www.elsevier.com/locate/pacfin

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Keywords: Corporate governance Family firms Bank control Idiosyncratic risk Firm performance;

References

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Citations

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Cited by:
  1. Morikawa, Masayuki, 2013. "Productivity and survival of family firms in Japan," Journal of Economics and Business, Elsevier, vol. 70(C), pages 111-125.
  2. Pascal Nguyen & Sophie Nivoix, 2011. "L’impact de la gouvernance sur le niveau des disponibilités des entreprises : le cas du Japon," Revue Finance Contrôle Stratégie, revues.org, vol. 14(4), pages 66-90, December.
  3. Nguyen, Pascal, 2012. "The impact of foreign investors on the risk-taking of Japanese firms," MPRA Paper 38991, University Library of Munich, Germany.
  4. Takanori Tanaka, 2011. "Corporate Governance and the Costs of Public Debt Financing: Evidence from Japan," Discussion Papers in Economics and Business 11-35, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  5. Jayaram, Jayanth & Dixit, Mita & Motwani, Jaideep, 2014. "Supply chain management capability of small and medium sized family businesses in India: A multiple case study approach," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 472-485.
  6. Chan, Chia-Chung & Lin, Bing-Huei & Chang, Yung-Ho & Liao, Wei-Chen, 2013. "Does bank relationship matter for corporate risk-taking? Evidence from listed firms in Taiwan," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 323-338.

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