Does Corporate Strategy Impact Risk Taking?

In recent years,risk-taking has attracted wide attention in academia,theory,and practice.In particular,since the outbreak of the financial crisis in 2008,the literature on risk-taking has grown year by year.In the process of gradual growth,enterprises will carry out various business decision-making,financial decision-making and investment decision-making,and risk-taking is one of the important decisions of enterprise investment decision-making,because risk-taking can not only help enterprises to grow economic performance,but also promote the value of enterprises.It can also promote socio-economic growth(John et al.,2008),so companies considering risk-taking in investment decisions will have an important impact on corporate value and socio-economic growth.However,the existing related literature research mainly discusses the factors affecting risk taking from the perspective of corporate governance and economic environment.There is no literature to further explore how the company's strategy affects the company's risk-taking level.The company strategy will affect how companies make investment decisions and influence the pursuit of economic interests.This may become a deeper factor affecting the company's risk-taking level.This paper takes the data of Shanghai-Shenzhen A-share listed companies from 1994 to 2014 as a research sample,and conducts in-depth theoretical analysis and empirical test on the relationship between corporate strategy and risk-taking,in order to find evidence of the impact of corporate strategies with different aggressive processes on risk exposure.The paper also analyzes how the nature of property rights affects the relationship between corporate strategy and risk taking.The regression results show that the company's strategy is positively acting on risk taking.The more aggressive the company's corporate strategy is,the higher the risk-taking level of the company,and the positive impact of the state-owned company's corporate strategy on the company's risk-taking is significantly weaker than that of non-state-owned enterprises.Finally,in order to explore the impact mechanism,combined with financing needs and equity incentives,study how these two intermediary variables act on the relationship between corporate strategy and risk-taking,indicating that the company's strategy can influence the company's risk-taking level through financing needs and equity incentives.The research content of this paper is mainly divided into the following six parts:The first part is the introduction.This part first introduces the research background of this paper.Secondly,it introduces the research significance of this paper.It starts from the theoretical significance and practical value respectively.Then it introduces the research purpose and research method of this paper.Finally,it introduces the research content and framework of this paper,and innovation.The second part is a literature review.This part mainly reviews and collates relevant domestic and foreign literatures on the two aspects of corporate strategy and risk taking.Firstly,it sorts out the relevant literature on the impact of the company's strategic classification and company strategy.Secondly,it sorts out the relevant literature on the risk-influencing factors and the economic consequences of risk-taking.Then,it sorts out the company's strategy,financing needs and risk-taking.Relevant literature,as well as relevant literature on corporate strategy,equity incentives and risk-taking;finally,a brief review of existing literature.The third part is the theoretical analysis and research hypothesis.The main content of this part is based on the capital asset pricing model,the theory of organizational structure,the theory of property rights,the free cash flow hypothesis and the theory of managerial compensation.The impact of the aggressiveness of the strategy adopted by the company on the level of risk-taking of enterprises,research hypothesis.The fourth part is the research design.The main contents of this part are as follows:Firstly,the sample selection and data source are introduced,then the explanatory variables,the interpreted variables,the intermediate variables and the control variables are defined.Finally,the regression model is designed according to each hypothesis.The fifth part is the empirical test and the result analysis.This section uses the six models proposed above to test the hypothesis proposed in this paper,using model(1)to test hypothesis 1,using model(2)to test hypothesis 2,and using model(3)and model(4)to test hypotheses.3a,test hypothesis 3b using model(5)and model(6).The use of empirical research to verify the correctness of hypothesis is the focus of empirical research.The sixth part is the conclusions and recommendations of the study.This part first summarizes the research conclusions of this paper based on the contents mentioned above,and then proposes relevant policy recommendations based on the research in this paper.Finally,it puts forward the shortcomings of this paper and how to improve these shortcomings in future research.The innovations of this paper are as follows:First,the research content is relatively new.On the basis of extensive reading of a large number of domestic and foreign literatures,this paper finds that there are many literatures on corporate strategy and risk-taking separately,but there are few literatures that combine the company strategy and risk-taking.This paper attempts to combine the two to conduct research.Whether it is based on the economic consequences of the company's strategy or the influencing factors of risk taking,' the research content is relatively new.Secondly,according to China's institutional background and economic environment,this paper discusses the regulatory role of property rights in the relationship between corporate strategy and risk-taking.This presents a new perspective for understanding the operational problems of state-owned enterprises.Thirdly,this paper also discusses the impact mechanism of the company's strategy on risk-taking.It finds that the company's strategy can influence the risk-taking through financing demand and equity incentives,which is conducive to a deeper understanding of risk-taking.Fourthly,this paper analyzes the endogenous nature of the company's strategy and risk-taking,and uses the effective cash rate as a tool variable for 2SLS regression.It is found that after reducing endogeneity,the regression results are still significant,making the return of the company's strategy to risk-taking more stable.