Corporate Ownership Structure And Risk-taking: Evidence From Japan
Journal of Governance and Regulation / Volume 6, Issue 4, 2017CORPORATE OWNERSHIP STRUCTUREAND RISK-TAKING:EVIDENCE FROM JAPANSunEae Chun *, MinHwan Lee *** Graduate School of International Studies, ChungAng University, Korea** Corresponding author, College of Business Administration, Inha University, KoreaContact details: 100 Inha-Ro Nam-Gu, Incheon 22212, KoreaAbstractHow to cite this paper: Chun, S., &Lee, M. (2017). Corporate ownershipstructure and risk-taking: evidence fromJapan. Journal of Governance &Regulation, 6(4), 39-52.http://doi.org/10.22495/jgr v6 i4 p4Copyright 2017 The AuthorsThis work is licensed under the CreativeCommons Attribution-NonCommercial4.0 International License (CC BY-NC ISSN Print: 2220-9352ISSN Online: 2306-6784Received: 28.09.2017Accepted: 27.11.2017JEL Classification: G21, G38DOI: 10.22495/jgr v6 i4 p4We examine the relationship between ownership structure andcorporate risk-taking in Japan over the sample periods of2000 2010. Reflecting the ongoing changes in the ownershipstructure in Japan, we incorporate the various kinds of insider andoutsider ownership in the analysis. Ownership such as concentratedownership, ownership by closely related parties, financialinstitutions comprising banks and insurance companies andmanagers are categorized into inside ownership, while ownershipby foreigners or financial institution such as investment trusts orpension funds are categorized into outside ownership. Theownership structure is found to have different impact on the firm’srisk-taking behavior. The study shows that concentrated ownershipor ownership by closely related parties affect the firm risks in aconvex manner and encourages the firm management to take morerisk when the firms have growth opportunities. On the other hand,ownership by financial institutions such as bank and insurancecompanies, does not seem to affect the firm risk level. This impliesthat the financial institutions fail to play their role of a shareholdermonitor. When managerial ownership is allowed, it is found thatJapanese managers’ incentives are aligned with those ofshareholders. Contrary to the conventional entrenchmenthypothesis, however, managers seem to take more risk as the shareof managerial ownership increases. Foreign investors are found toenhance corporate risk-taking in a monotonic manner and do notbias corporate investment in a conservative direction in pursuit oftheir short-term gains. Domestic institutions such as investmenttrusts or pension funds are found to neither affect the firm risklevel nor enhance the firm value.Keywords: Corporate Ownership Structure, Risk Taking, Managers’Incentives, Financial Institution Ownershipand its financial decisions and policies (Stulz 1988,Shleifer and Vishny 1997).However, one critical issue remains largelyunexamined - the influence of corporate ownershipon the risk-taking behavior of firms. Berle and Means(1932) first evoked the link between ownershipstructure and firm risk-taking. They argue thatownership-management separation leaves room forconflicting goals to arise. In terms of risk-taking,owners derive greater incentives and rewards thanthe managers do and therefore favor riskier projects1. INTRODUCTIONMuch of the previous studies on corporategovernance and ownership structure examines theproblem of separation between ownership andmanagement (Berle and Means 1932, Jensen andMeckling 1976, Fama and Jensen 1983a 1983b). Inparticular, they compare the relationship betweenownership concentration and other variables such asfirm performance (Morck et al. 1988), value (Slovinand Sushka 1993), competitiveness (Gadhoum 1999),39
Journal of Governance and Regulation / Volume 6, Issue 4, 2017to maximize the call option value embedded in theirequity holding. On the other hand, managers oftenhave both the discretion and incentive to pursuestrategies and practices that benefit themselves atthe expense of shareholders. Therefore, managerswhose employment security and income are tied toone firm would behave risk-averse in the absence ofmonitoring and incentive alignment.Wright et al. (1996) pointed out thatshareholders with significant stakes in a companycan shape the nature of its corporate risk-taking,which may affect a firm’s ability to compete andeventually its survival. In this context, Whitley (2000)argues that differences in corporate governancehave an important bearing on firms’ risk-taking,therefore on the capacity to innovate.We fill the hole in the corporate governanceresearch by examining the relationship betweenownership structures and corporate risk-taking inJapan. Japan is of particular interest since ownershipstructure in Japan is unique differing from thatcommonly found in Anglo American companies. Forexample, in the United States, the separation ofownership from control and the presence ofatomistic shareholders have induced conflicts ofinterest between managers and shareholders. Sincethe exercise of ownership rights is dispersed due tothe dispersed ownership in the U.S., managers aretypically monitored through mechanisms such asmanagerial incentives (which includes stocks andoptions, performance-based compensation), hostiletakeovers, managerial labor markets, activeinvestors and boards of directors.In contrast, the ownership structure ofJapanese firms used to be relationship-based andrelatively illiquid. Managers and foreigners ownedlimited stakes in companies and cross-shareholdingbetween banks and corporations and amongcorporations were extensive. Japanese managers aremonitored and intervened by large shareholders orcreditors, typically banks.Most of the empirical work on corporategovernance implicitly assumes that shareholders aremonolithic stakeholder groups whose interest arehomogenous with a sole focus on the goal ofmaximizing returns on their equity investments.However, in many other economies, such as Japan,this assumption may be an oversimplification sincea diverse group of shareholders owns shares formultiple purposes (Gedajlovic and Shapiro 2002,Gedajlovic et al. 2005).The unique Japanese ownership system tookroot during the post-war period and was remarkablystable, lasting for almost three decades until itunderwent dramatic changes in the early 1990s. Forexample, foreign investors began to increase theirstakes in Japanese companies, especially in largerfirms. The ratio of shares held by stableshareholders began to plummet from previousheights.When we investigate ownership structure inJapan, we broadly classify them into insider andoutsider ownership over the sample periods of2000 2010. As a risk-taking measure, we use thestock market information. We also investigate therelationship between risk-taking behavior and firmperformance to appraise whether the risk-takingbehavior led to firms’ enhanced performance. Whilethis research is very similar in aims andmethodology with Nguyen (2011) who studied therelationship between corporate governance and risktaking in Japan, our research differs from Nguyen(2011) in two points. First, the ownership measure ismore comprehensive in that we categorizeownership into the inside and outside ownership.Second, Nguyen (2011) used an older sample period,where ownership was still more concentrated andbanks owned larger stakes and cross-holdings werestill more prevalent, while our data set is morerecent one.The paper is organized as follows. Followingthe introduction, chapter 2 surveys the literature onthe relationship between ownership structure andcorporate risk-taking. Chapter 3 presents data andempirical estimation results and chapter 4 concludesthe paper.2. LITERATURE REVIEWAgency cost is an economic concept concerning thefee to a ‘principal’ (an organization, person or groupof persons) when the principal chooses or hires an‘agent’ to act on its behalf. Because the two partieshave different interests and the agent has moreinformation, the principal cannot directly ensurethat its agent is always acting in his (the principal’s)best interests. Agency theory in the perspective ofownership structure and firm risk-taking is firstdeveloped by Berle and Means (1932) and thentheorized by Monsen and Downs (1965) and Monsenet al. (1968). They argue that ownershipmanagement separation leaves room for conflictinggoals to arise. In terms of risk-taking, owners derivegreater incentives and rewards than the managersdo and therefore favor riskier projects to maximizethe call option value embedded in their equityholding.On the other hand, managers often have boththe discretion and incentive to pursue strategies andpractices that benefit themselves at the expense ofshareholders. Managers may engage in short-runcost augmenting activities to enhance theirnonsalary income and/or they may indulge theirneed for power, prestige, and status by attemptingto maximize corporate size and growth rather thancorporate profits. Naturally, managers will opt toinvest in less risky projects to protect their investednon-diversifiable human capital in the firm.Consequently, managers may pursue non-valuemaximizing strategies unless they have properincentives or face appropriate pressure such aspressures from managerial labor markets (Fama1980), the influence of capital market signals(Easterbrook 1984), or the threat of hostile takeovers(Martin and McConnell 1991).Jensen and Meckling (1976) contended thatagency costs decline as managerial ownership risessince the financial interests of corporate insiders(managers) and shareholders increasingly converge.Demsetz and Lehn (1985) argue that within firmsfacing more uncertain environments, insider’sactions are less observable and thus the benefits ofownership are greater. For example, if informationasymmetry is an increasing function of uncertainty,this would suggest a positive relationship betweenbusiness risk-taking and managerial ownership.Amihud and Lev (1981) find that inside managerswith large stakes of corporate capital are less40
Journal of Governance and Regulation / Volume 6, Issue 4, 2017motivated by considerations of risk-aversion whenevaluating merger opportunities.Agency theory also provides a potential linkbetween large but external shareholders, such asblockholders and institutional investors andcorporate risk-taking. Contrary to the notion ofdispersed ownership in modern corporations,outside the U.S., large shareholders are prevalentand exert control through having ownership in alarge group of firms (Shleifer and Vishny 1986, LaPorta et al. 1999, Claessens et al. 2000).One argument that justifies a positiverelationship between risk-taking and ownership isassociated with monitoring. While dispersedatomistic shareholders do not have incentives tomonitor the manager, which aggravates conflictsbetween shareholders and managers, shareholderswith large equity stakes in the company haveincentives to monitor the manager with the purposeof value maximization by taking riskier projects(Shleifer and Vishny 1986, Holderness 2009).Therefore, shareholders with incentives to monitorwill end up taking more risks.However, if blockholders have incentives andopportunities to consume corporate benefits to theexclusion of small shareholders, their preference ofrisk levels may conflict with that of ional investors have been suggested toencourage strategies that provide consistent andpredictable revenues, rather than high risk-highreturn investment. In addition, shareholders withsignificant ownership stakes might be reluctant totake more risk in order to secure their privatebenefits of control.8Whilevariousstudieshaveexaminedmanagerial ownership (Denis et al. 1997, Amihudand Lev 1981), the structure of CEO incentives (Coleset al. 2006) and legal protection of investors (John etal. 2008), the role of the largest shareholders oncorporate risk-taking has received limited attentionexcept a few research like Wright et. al. (1996).Hypothesizing the positive influence of institutionalownership on firms’ risk-taking, Wright et al. (1996)considers the inside managers and blockholders’ownership simultaneously. However, Wright et al.(1996) do not find a significant relationship betweenthe latter and risk-taking. Gadhoum and Ayadi(2003) test whether the ownership structure ofCanadian firms is negatively related to firm risk. Theauthors find a nonlinear relationship betweenownership and risk-taking, which is high at both lowand high levels of ownership. John et al. (2008)argue that undiversified large shareholders assumedto be prevalent in countries with low investorprotection, take less risky projects. Using a largecross-country sample, Paligorova (2009) finds apositive relationship between corporate risk-takingand equity ownership of the largest shareholdersand finds that this result is entirely driven byinvestors with a diversified e in Japan, many authors examined therelationship between ownership structure and firmperformance from the mid-1980s to the late 1990s.Gedajlovic and Shapiro (2002) found a positiverelationship between ownership concentration andfinancial performance, consistent with agencytheory. Findings by Chen et al. (2003) suggest agreater alignment of managerial interests with thoseof stockholders. Hiraki et al. (2003) show that thecross shareholdings between the main bank andclient firms are negatively related to firm value.After examining six distinct categories of Japaneseshareholders, Gedajlovic et al. (2005) argued that therelationship between the equity stakes of aparticular category of investors and a firm’sfinancial performance and investment behavior ismore complex than is depicted in simple principalagent representations. Investigating the relationshipbetween ownership structure and Japanese firms’risk-taking behavior, Nguyen (2011) confirms thatthe increased involvement of foreign investorsmotivated by shareholder value is likely to havetriggered a major shift in their risk-taking behavior.3. DATA AND EMPIRICAL ESTIMATION RESULTS3.1 Evolution of corporate ownership structure inJapanMiyajima and Kuroki (2010) extensively describe theownership trends in Japan and this section is heavilyindebted to Miyajima and Kuroki (2010). Theownership structure in Japan that took root duringthe post-war period had become well established bythe late 1960s and was remarkably stable for almostthree decades. If the ownership is categorized intoinsider and outsider ownership9, insider ownershipis dominant during the periods. As it enters the21stcentury, however, it became more of an outsidersystem in the sense that outsider ownership becamemore prevalent.10In the mid-1990s, when it became evident thatthe Japanese economy faced prolonged stagnation,the costs of Japan’s unique ownership structurecame under scrutiny. The faithful and stable crossshareholding system had the potential to fostermoral hazard among incumbent managers. Asmanagement became entrenched, this loweredperformance due either to over-investment or loweffort levels in relation to capital and labor input. Italso appeared that banks failed to act as delegatedmonitors as they are supposed to do. This reflectsthe banks’ conflicts of interest, which arise from thefact that banks have to act as shareholders andcreditors at the same time.11After the banking crisis, and particularly after1999, banks reduced shareholdings mainly by selling9Insiderincludes ownership by financial institutions andbusiness corporations, whereas outsider includes ownershipby investment trusts, annuity trusts, securities companies,foreigners and individuals.10 For a comprehensive survey of the literature on thediscussion of Japanese model of corporate governance, seeYafeh (2000) and Frank et. al. (2012)11For a comprehensive survey of the literature on thediscussion of Japanese model of corporate governance, seeYafeh (2000) and Frank et. al. (2012)A concentrated ownership structure has been suggested asone of the leading indicators of an agency problem betweencontrolling and minority shareholders (La Porta et al. 2000;Shleifer & Vishny 1997), in which the controlling shareholdersmight take advantage of their control to expropriate minorityshareholders wealth through activities such as tunneling.841
Journal of Governance and Regulation / Volume 6, Issue 4, 2017shares with higher liquidity and higher expectedrates of return, while holding onto shares of firmswith which they had long-term relationships. At thesame time, financial market deregulation and thewider availability of equity and forms of nonmediated debt has lessened the dependence of largeJapanese firms on banks for financial support.Profitable firms with easy access to capitalmarkets and high levels of foreign ownership priorto the banking crisis tended to wind down crossshareholding, while low-profitability firms withdifficulty accessing capital markets and low levels offoreign ownership in the early 1990s tended tomaintain cross-shareholding arrangements withtheir banks. Additionally, tax code and accountingchanges have compelled financial and non-financialfirms to unwind their equity positions in affiliatedcompanies (Fukao 1999, Yasui 2001) Miyajima andKuroki (2010) notes that the power of outsideinvestors is increasing in Japan. In particular, foreigninvestors began to increase their stakes in Japanesecompanies in the early 1990s, especially in largerfirms. At the same time, the traditional stableshareholders appear to be diminishing.controlled by the firm.13 Since competitiveadvantages also result in higher performance, thestrategy perspective suggests a positive relationbetween firm performance and firm-specific risk.Many studies highlight the role of firm-specificrisk. Goyal and Santa-Clara (2003) claim thatidiosyncratic risk contributes to predicting futurestock returns. Campbell et al. (2001) suggest that thehigher idiosyncratic risk displayed by US firmsreflects their greater emphasis on growth strategies.Xu and Malkiel (2003) establish that idiosyncraticvolatility is positively associated with expectedearnings growth. Morck et al. (2000) argue thateconomies with better investor protection arecharacterized by higher firm-specific risk and erates information that contributes to moreefficient resource allocation. Ferreira and Laux(2007) confirm this implication by showing thatfewer impediments to shareholder rights (i.e., bettercorporate governance) increase the incentive tocollect firm-specific information and act upon it,which results in higher idiosyncratic volatility.In order to estimate firm-specific risk, we usethe three-factor model developed by Fama andFrench (1993). They find that firms that have highBE/ME (a low stock price relative to book value) tendto have low earnings on assets while low BE/ME (ahigh stock price relative to book value) is associatedwith persistently high earnings. Size is also relatedto profitability. Controlling for book-to-marketequity, small firms tend to have lower earnings onassets than big firms do.Their three-factor model is specified as followsto decompose the total return into systematic andidiosyncratic risk in equation (3),3.2 Data and modelIn order to investigate the effect of ownershipstructure on risk, we include 1479 Japanese firmslisted on the Tokyo Stock Exchange in the sampleovertheperiodof 2000-2010.12Financialinformation (accounting data and stock returns) anddata on ownership structure are obtained from theNEEDS database supplied by the Nikkei newsgroup.The empirical model we use to estimate therelationship between ownership and risk-taking isrepresented in equation (1). We also investigatewhether risk-taking enhances firm performance, asmodeled in equation (2). All the explanatoryvariables are lagged by one period from thedependent variable to clarify the causality with riskor firm performance. We employ panel regressionmethodology in order to estimate equations.Risk it β1 Ownershipit 1 β2 Controlit 1 β3 dummy εit(1)Performanceit β1 Ownershipit 1 β2 Controlit 1 β3 Risk it 1 β4 dummy εit(2)R i,t R f,t αi βm,j (R M,t R f,t ) βSMB,i R SMB,t βHML,i R HML,t εi,t(3)where R SMB,t , R HML,t are the return proxies forthe size variable and the book-to-market variables,respectively. In order to construct the two proxiesfor the size and book-to-market variables, we havefollowed the exact procedure of Fama and French(1993) and Nguyen (2011) by classifying firms in twosize of small and large, and 3 B/M groups of low,medium and high ratios.Market return (R M,t ) is the value-weightedreturn on a portfolio containing all stocks. The riskfree rate (R f,t ) is the 1-month repo rate reported bythe Bank of Japan. The difference R M,t R f,trepresents the monthly excess return on the marketindex. Idiosyncratic or firm-specific risk (SPEC) iscomputed as the root means square of residuals, εi,t ,i.e., total variability not explained by the three-factormodel. Total risk (TOTAL) is measured by thestandard deviation of the firm’s monthly stockreturn using 60 months.where i and t represent particular firm and time.Measurement of risk-takingThe decomposition of risk into systematic and firmspecific risk component seems particularly relevantin analyzing corporate risk-taking. Following Nguyen(2011), we use firm-specific idiosyncratic risk as aproxy for firms’ risk. The large idiosyncraticcomponent of stock volatility is likely to reflect themarket power and other competitive advantagesStrategic management research emphasizes the importanceof firm-specific risk in view of achieving competitiveadvantages. Rumelt (1974) and Porter (1980) advise firms todevelop strategies to create entry barriers and build upmarket power, by way of product differentiation and/oreconomies of scale, which obviously increases firm specificrisk. By gaining market power, firms become less exposed tomarket-wide fluctuations; hence their lower systematic riskand higher idiosyncratic risk.13Financial institutions are excluded due to their particularperformance and risk-taking metrics. Firms with negativeequity are also excluded due to potentially excessive risktaking behavior.1242
Journal of Governance and Regulation / Volume 6, Issue 4, 2017Ownership variablesare unsatisfied with the management of the firm.They can exert a disciplining influence by pricing theequities of firms, which do not follow policiesconsistent with their investment objectives at adiscount.Variable ‘Foreign’ represents the shares ownedby foreigners while ‘Nbksh2’ represents sharesowned by both the investment trusts and pensionfunds. Since the mid-1990s, foreign ownership ofJapanese firms has been rising, climbing to over 18%of all listed Japanese shares at the end of March200015. Foreign investors might differ from domesticinstitutions with respect to risk-taking. Foreigninvestors who inherently lack close ties withdomestic firms are likely to actively monitorbusiness decisions by using their votes (Fukao 1999).If that is the case, foreign investors should beexpected to be more effective in reducing managers’incentives to avoid risk relative to domesticinstitutional investors, which may lead to higherrisk-taking behaviour. However, if foreign investorsare only interested in short-term gains, they mightcause corporate investment decisions to be moreconservative than those of domestic institutionalinvestors.Firms wishing to access the capital of marketinvestors must be attuned to the objective of outsideinvestors. In this regard, the investment decision ofhigh-profile money managers such as those incharge of large pension and investment funds arenoteworthy insofar as their decision can stronglyinfluence the investment decisions of other marketinvestors (Prevost and Rao 2000). They are supposedto be independent investors with the sole incentiveof profit-making influencing the management to actin a way to enhance the firm value by taking risk.From the agency theory, we can hypothesizethe effects of ownership on the risk-taking behaviorin the following manner. Since the hypothesis doesnot predict the definite direction of risk takingbehavior, we turn to the empirical estimation resultspart for the conclusion.Ownership structure in Japan can be broadlyclassified into insider and outsider ownership. Here,insider investors14 refer to those who derive ‘privatebenefit’, which may reflect the goal of otheractivities they are engaged in as corporations, theprospects of succession or inheritance of the familyfirms, as well as financial returns from theirinvestments. Examples of insider investors arefamily, managers and stable investors. Stableshareholders (antei kabunushi or seisaku toshika)usually include banks and insurance companies andaffiliated firms. As these firms are not only acorporation’s shareholders but are also creditors,buyers, suppliers and business partners, they arewell positioned to monitor the policies of firmswithin their network and to enforce group normsfavoring growth and stability rather thanprofitability objectives.On the other hand, outsider investor’s soleinterest is restricted to the financial returns of thecompanies they invest. They do not derive “privatebenefits” that may conflict withfinancialconsiderations. Outside investors include investorssuch as small individual investors, financialinstitutions such as securities houses, mutual funds,investment trusts or pension funds, and foreigninvestors.The ownership variables such as ‘Largest’,‘Cross’, ‘Fininst’, ‘Manager’ in this study areclassified as insider investors, while variables suchas ‘Foreign’ and ‘Nbksh2’ as outsider investors. Thevariables are defined in Table 1. Variable ‘Largest’ isthe shares owned by the 10 largest shareholders. Itis included in the estimation in order to test for theeffect of concentrated ownership on the risk-takingbehavior of the firms. In the absence of either capitalmarket constraints or vigilant outside directors, themonitoring of managers by shareholders who holdlarge blocks of shares (blockholders) takes onheightened significance. Variable ‘Cross’ representsthe shares owned by closely related parties such asaffiliated firms). Variable ‘Fininst’ refers to thefinancial institutions such as banks and insurancecompanies, which are stable shareholders. Financialinstitutions in Japan are not only shareholder butalso creditors of the firms. Since creditors have fixedclaims, while shareholder has residual claims,creditors have to bear the downside of risk-takingbut have nothing to gain beyond their fixed claim,which may lead to the risk aversion of the firm.‘Manager’ represents the shares owned by themanagers. From an agency perspective, manyJapanese managers may have both the incentive andthe discretion necessary to pursue their owninterests at the expense of shareholders. The closeralignment of interest to that of shareholdersinduced by managerial share ownership isconsidered to change the risk-taking behavior ofmanagers and hence improve firm performance.Since the stakes of outsider investors aretypically small, and because such investors areunencumbered by strong ties characterizingrelations between stable investors and a focalorganization, they can easily sell their shares if theyInsider ownership oftenmanagement in literature.14referstoownership-Hypothesis 1: Ownership ‘Largest’ mayincreases firms’ risk takingHypothesis 2: Ownership ‘Cross’ may increasesfirms’ risk takingHypothesis 3: Ownership ‘Fininst’ may notincreases firms’ risk takingHypothesis 4: Ownership ‘Foreign’ mayincreases firms’ risk takingHypothesis 5: Ownership ‘Nbksh2’ may or maynot increases firms’ risk takingby15Stock43Distribution Survey 2001
Journal of Governance and Regulation / Volume 6, Issue 4, 2017Table 1. Definition of variablesVariableRisk itInside OwnershipitOutside OwnershipitControl Variables, X SIZELVGEarningsLiquidQ ratioROAFIXEDFREQDescriptionTotal riskIdiosyncratic riskSum of shares owned by 10 largest shareholdersShares owned by those in close relationship such asaffiliated firmsShares owned by financial institution such as banks andinsurance companiesShares owned by managerShares owned by foreign institutionShares owned by investment trust and pension fundsLog of firm’s total assetLeverage, ratio of total debt to total assetsRatio of EBITDA to total assetsRatio of liquid assets to total assetsMarket to book value of assetsRatio of operating profits to total assetsRatio of fixed asset to total assetsAmount of annual trading in the firm’s stock scaled by thefirm’s market capitalizationControl variablerelationship (Cross) is 44.9% similar to the variable‘Largest’. The mean of shares owned by the financialinstitution is 27.5%. The mean of shares held bymanagers (Managers) is 5.5%. The mean of foreignownership (Foreign) is 11.1%, while the mean ofshares owned by domestic institutions of theinvestment trust and pension fund combined(Nbksh2) is relatively small at 2.7%. The standarddeviations of all the ownership variables exceed 10%,suggesting that the distribution provides sufficientvariation to test for the effect of different ownershipon risk-taking.The mean of total risk is about 15.1% permonth, while the mean of idiosyncratic risk is 3.2%per month. The idiosyncratic risk is significantlysmaller than in the case of US firms (Campbell et al.2001, Morck et al. 2000). For the control variables,the mean size of the firm (Size) is 4.896 in log termand the mean ratio of debt to the asset (LVG) is0.497. The mean ratio of EBITDA to total asset(Earnings) is 0.082. The ratio of liquid asset to totalasset (Liquid) is 0.334. The average profitabilitymeasured by ROA is 0.019. The fixed ratio is 0.518.Tobin’s Q, which represents the growth opportunity,is 1.260 with a standard deviation of 0.021. Finally,the amount of annual trading in a firm’s stock isabout0.000023timesthefir
unexamined - the influence of corporate ownership on the risk-taking behavior of firms. Berle and Means (1932) first evoked the link between ownership structure and firm risk-taking. They argue that ownership-management separation leaves room for conflicting goals to arise. In terms of risk-taking,
ownership structure, in the case of publicly listed firms, consists of two distinctive features: First, ownership concentration meaning if a firm is owned by one or few large owners (concentrated) or by multiple smaller owners (dispersed/diffused), and ownership identify, referring to the type of owner such as individuals/families, institutions .
corporate finance considers the inter- relationships between corporate governance, takeovers, management turnover, corporate performance, corporate capital structure, and corporate ownership structure. Mo
OWNERSHIP STRUCTURE IMPACT ON CORPORATE . control is an effective organizational structure in mitigating agency problems and enhancing firm performance when external corporate governance is weak. . BMW and Robert Bosch. German system is mainly based on banks as shareholders. They have
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their ownership in the firm increases (Beatty & Zajac, 1994), or there is a positive association with risk and increased equity (Sanders & Carpenter, 1998). The ownership structure of a firm can influence it's corporate strategy, as it is related to the different degrees of risk aversion (Thomsen & Pedersen, 2000).
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Risk is the effect of uncertainty on objectives (e.g. the objectives of an event). Risk management Risk management is the process of identifying hazards and controlling risks. The risk management process involves four main steps: 1. risk assessment; 2. risk control and risk rating; 3. risk transfer; and 4. risk review. Risk assessment
Design Standards for Accessible Railway Stations Version 04 – Valid from 20 March 2015 A joint Code of Practice by the Department for Transport and Transport Scotland March 2015 . OGI. Although this report was commissioned by the Department for Transport (DfT), the fndings and recommendations are those of the authors and do not necessarily represent the views of the DfT. The information or .
