Equity Structure?Managerial Ownership And Risk Taking

Risk-taking has a significant impact on an enterprise's value as it will influence the long-term development of a company.As major decision makers of the company,the risk-taking propensity of managers largely determines what choice a company will make when facing risky projects.Under the separation of ownership and management in modern enterprises,shareholders and managers have different risk preferences,which will bring on the agency problem about risk taking.Managerial ownership is generally considered be an effective way to alleviate this problem,as it will give the manager a certain residual claim,which in theory,could reconcile the interests of managers and shareholders.This article explores the relationship between managerial ownership and corporate risk taking,and also considers the nature of equity and large shareholder control.Using the data of listed companies from 2008 to 2015,this article firstly examines the impact of managerial ownership on corporate risk taking,further including the nature of equity and large shareholder control in the research framework.The results show that there is a significant inverted U shape relationship between managerial ownership and corporate risk taking.Furthermore,the inverted U shape relationship is still significant in private enterprises,while in sate-owned enterprises,managerial ownership has a noteworthy negative effect on risk taking,which means certain amount of managerial ownership is conducive to advancing corporate risk taking,but only in private enterprises.Considering the impact of large shareholder control.In private enterprises,the large shareholder control would have an increasing conflicting effect and weaken the positive relationship between managerial ownership and risk taking at first;while with the increase of ownership,the large shareholder control would show a supervisory effect and thus produce a positive effect.While in state-owned enterprises,the large shareholder control exerts a liner supervisory effect.The conclusions might be helpful in understanding how managerial ownership will affect corporate risk taking and be referential in managerial ownership grant,which could be conducive to alleviating agency conflicts in the risk-taking aspect.