Heterogeneity And Nonlinearity Of The Impact Of Ownership Concentration On Corporate Risk-taking

With the Chinese economy has entered a new normal and the authorities presented "The Belt and Road" strategy,Enterprises from China need to improve their ability to bear risks to deal with the risks and uncertainties from fierce domestic and international market competition.The assumption of enterprise risk directly determines the transformation and development of enterprises,and it has a considerable impact on enterprises' long-term value realization,which can be helpful to accelerate the accumulation of capital and technological progress,and is of great significance to the realization of economic transformation in China.However,compared with other developed countries,in general,Chinese enterprises have lower risk bearing capacity and tend to be conservative in risk decision-making,especially on the choice and judgment of projects.Therefore,how to effectively improve the risk-taking level of Chinese enterprises to facing the new opening situation is an urgent issue.Based on the background of Chinese economic transition,this paper uses the incomplete contract theory,trying to from the perspective of ownership concentration which is the mainly cause of the second kinds of agency problems,in order to understand the relationship between the ownership concentration and the risk-taking level of enterprise.Meanwhile,it is essential for us to make clear the internal effects caused by this equity form between the shareholders' interest conflicts and selections of risk investment projects,therefore,increasing China's enterprises' risk-taking level and putting forward a kind of feasible solution.In this paper,the data samples for the period of 2005-2015 in Shanghai and Shenzhen Stock Exchange listed A shares of enterprises(excluding the financial sort).After measuring the volatility of corporate risk-taking,a quantitative model is established to study the relationship between ownership concentration and corporate risk taking.Further,through the group regression,the article investigates the ownership heterogeneity and the plate heterogeneity.Finally,we analyses the disparate impacts of the different shareholders on the risk of the enterprise,and explores the nonlinear relationship between ownership concentration and corporate risk taking by using threshold regression.The main conclusions include:enterprises that owning a higher ownership concentration have a lower corporate risk taking ability;equity concentration has a greater impact on those state-owned enterprises and small or medium-sized enterprises risk-taking;with the increase of ownership concentration,this influence on enterprise risk taking has the nonlinear effects,manifesting a rise at first,further there has a drop and then growth again,like a similar U shape;although very high ownership concentration can promote the state-owned enterprises' risk-taking level,the effect is fewer than the dispersed ownership role;small and medium enterprise board listed companies need to more appropriate dispersed ownerships to obtain the risk-taking ability,compared those main-board public companies.Therefore,from the corporate governance perspective,state-owned enterprises and private enterprises are all required to further reduce the concentration of ownership,improve the equity balance degree as well as optimize the ownership structure of enterprises;as well,the authorities and related departments should tighten their grip on Chinese capital market and strengthen the listed company information disclosure and supervision system by establishing the corporate risk tolerance index system,to provide a fair and open market environment and support system for enterprises' risk-taking.