Corporate Governance and Risk-Taking
Better investor protection could lead corporations to undertake riskier but value-enhancing investments. For example, better investor protection mitigates the taking of private benefits leading to excess risk-avoidance. Further, in better investor protection environments, stakeholders like creditors, labor groups, and the government are less effective in reducing corporate risk-taking for their self-interest. However, arguments can also be made for a negative relationship between investor protection and risk-taking. Using a cross-country panel and a U.S.-only sample, we find that corporate risk-taking and firm growth rates are positively related to the quality of investor protection. Copyright (c) 2008 The American Finance Association.
Year of publication: |
2008
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Authors: | JOHN, KOSE ; LITOV, LUBOMIR ; YEUNG, BERNARD |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 63.2008, 4, p. 1679-1728
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Publisher: |
American Finance Association - AFA |
Saved in:
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