The Influence Research Of Government Control On Coorporate Risk-Taking

Our economy situates in a special period of transition. On the one hand, it still exists serious government control due to the out of sync in economic reform and regime reform. On the other hand, because the big shareholders have the motive to speculate personal profit, which results to the manager who obeys to the big shareholders making the decision for the sake of the small shareholders’interests. Thus, the government control and the special owner structure system will probably influence the managerial risk-taking. Corporate risk-taking is recognized as an active behavior by the market. It has a positive relationship with firm value, which drives the growth of the demestic economy. However, the confliction between managers and shareholders is the main reason which leads to the deviation of the managerial risk-taking, and therefore harms the smooth growth of economy.This paper taking non-financial listed corporations’datas during the year of1998-2012as sample, examines the the differences of risk-taking among companies which have different actual controllers in order to analysis government control. It also examines the differences of enterprise risk among different levels of government control to analysis the degree of intevention. The study finds that the risk-taking level of government controlled companies is lower than the companies out of government control, which is due to the intervention. And because of the unenough national supervision on local government, the intervention on the enterprise is higher than that of central government, which in turn results to the the highest risk-taking level in central government controlled campanies, second in province level, and the lowest in city and country level. Taking the data of1998-2012as samples, this paper conducting the research with the divided share reform variables for inspection, finds that the company’s risk-taking level rises after divided share reform, and the difference in risk-taking level between government controlled and non government controlled enterprises is narrowed. It is proved that the existence of large shareholders and managers embezzlling the interests of small shareholders jointly, however the divided share reform alleviates the agency conflicts among shareholders in a certain extent, so that corrects the deviation in managers’risk-taking.The equity division reform promotes the common interests among big and small shareholders, works on the principal-agent confliction in shareholders through correcting the deviation in managerial behaviors and then affect company’s risk-taking. In the framework of agency theory, this paper, introducing the equity division reform as an exogenous impaction, analyzes the changes in listed corporation risk-taking before and after the reform in order to investigate of the possible mechanism that the large shareholders and managers may damage the interests of small shareholders consequently leading to the deviation of risk taking.In a word, on the basis of analysing both demestic and worldwide relative articals, combining the background of the transitional period in our country, this paper investigates the differences in the risk-taking among these listed corporates which have different kinds of actual controller. We also examin the changes in risk-taking among these firms before and after the equity division reform, which can help us better understand the situation of the government control and the confliction between shareholders in our contry. The conclusion in this paper has a good reference for better norming the ownership strcuture in our listed companies and the government control behavior.