The Impact Of Risk-taking On Corporate Growth

Enterprise growth represents the abilities of a enterprise to continuously exploit its untapped resources and release its potential value.And it is an expectation based on enterprise's development and capability.For the development of a company,it is crucial to improve the performance and value,while enterprise growth is the basis for the enterprise to boost performance and long-term value.Previous studies have shown that the enterprise growth is affected by many factors.A higher level of risk-taking means that managers less abandon high-risk investment projects with an expected net present value greater than 0.Meanwhile,many recent studies have shown that moderate risk-taking can promote enterprise's growth.However,risk and return are a balance,and it is extremely counterproductive.If a enterprise undertakes excessive risk-taking,it will inevitably lead to an uncontrollable situation,resulting in adverse impacts on the enterprise growth.Therefore,there may be a non-linear inverted U-shaped relationship between enterprise risk-taking and enterprise growth,which is the core issue of this paper.Due to state-owned enterprises undertake more political tasks and social responsibilities compared with private enterprises,the managers of state-owned enterprises generally have a lower willingness and level to risk-taking.Therefore,the risk-taking of enterprises has less impact on the enterprise growth.In addition,the marketization level of developed areas is usually higher,it means that more resources will be allocated by the market according to the perspective of competition,and the state-owned enterprises are relatively less interfered by the government,the political pressure is relieved,and the investment decision-making is relatively more free.At this time,whether it is for the purpose of maximizing enterprise value or their own interests,managers will pay more attention to the enterprise growth rather than just the completion of tasks.Therefore,the managers may be more inclined to risk-taking for high-risk and high-yield projects,and the role of risk-taking in enterprise growth may become more significant in regions with higher marketization levels.In this paper,the sample of A-share listed companies from 2011 to 2018 is used to study the relationship between enterprise risk-taking and enterprise growth.During this period,the nature of corporate property rights and regional marketization level variables are introduced for in-depth discussion.Through systematic theoretical analysis and empirical testing,this paper drawsthe following conclusions:(1)There is a nonlinear inverted U-shaped relationship between risk-bearing and enterprise growth,that is,when When an enterprise undertakes risk taking moderately,it is beneficial for the long-term growth of the enterprise if the enterprise raises its risk taking level.However,when the enterprise carries out excessive risk risk,the growth of the enterprise will be weakened because the risk is greater than the return;(2)The relationship between corporate risk-taking and growth has played a significant moderating role.Compared with state-owned enterprises,the risk-taking level of private enterprises is usually higher,so the risk-taking of private enterprises has a more significant impact on their growth;(3)Higher regional marketization level can improve the risk-taking of enterprises and promote risk-taking Behaviors play a better role,and thus have a more positive impact on their growth,especially for state-owned enterprises,the positive impact brought by the improvement of the marketization level is particularly significant.Finally,based on the conclusions of the study,this article puts forward relevant suggestions from the enterprise levels.