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Non‐executive directors and corporate risk‐taking: Evidence from China

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  • Siyu Zhang
  • Chao Lu

Abstract

This study empirically examines the relationship between non‐executive directors and corporate risk‐taking. The findings show that non‐executive directors could significantly improve the risk‐taking level of corporations. Non‐executive directors reduce corporate agency costs and alleviate financing constraints, thus promoting a corporation's risk‐taking level. Further research shows that the positive impact of non‐executive directors on corporate risk‐taking is weakened by being state‐owned, higher executive incentives, better external supervision, higher ownership concentration, higher management age and greater uncertainty in the external environment. Additionally, non‐executive directors appointed by both controlling and non‐controlling shareholders play a positive role in promoting corporate risk‐taking.

Suggested Citation

  • Siyu Zhang & Chao Lu, 2024. "Non‐executive directors and corporate risk‐taking: Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(S1), pages 5069-5106, December.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:s1:p:5069-5106
    DOI: 10.1111/acfi.13326
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