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The role of state and foreign owners in corporate risk-taking: Evidence from privatization

  • Boubakri, Narjess
  • Cosset, Jean-Claude
  • Saffar, Walid
Registered author(s):

    Using a unique database of 381 newly privatized firms from 57 countries, we investigate the impact of shareholders' identity on corporate risk-taking behavior. We find strong and robust evidence that state (foreign) ownership is negatively (positively) related to corporate risk-taking. Moreover, we find that high risk-taking by foreign owners depends on the strength of country-level governance institutions. Our results suggest that relinquishment of government control, openness to foreign investment, and improvement of country-level governance institutions are key determining factors of corporate risk-taking in newly privatized firms.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0304405X1200253X
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    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 108 (2013)
    Issue (Month): 3 ()
    Pages: 641-658

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    Handle: RePEc:eee:jfinec:v:108:y:2013:i:3:p:641-658
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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