The Impact of Specialized Environmental Courts on Corporate Risk‐Taking: Evidence from a Natural Experiment in China

2020 ◽  
Vol 49 (1) ◽  
pp. 99-118 ◽  
Author(s):  
Huayun Zhai ◽  
Kam C. Chan ◽  
Qingzhuo Liu ◽  
Kemei Liu
Keyword(s):  
Risk Taking ◽  
Natural Experiment ◽  
Corporate Risk ◽  
The Impact

Corporate risk taking and sustainability: a case of listed firms from USA and Germany

2019 ◽  
Vol 10 (1) ◽  
pp. 2-15 ◽  
Author(s):  
Zahid Irhsad Younas ◽  
Ameena Zafar
Keyword(s):  
Risk Taking ◽  
Profit Maximization ◽  
Well Being ◽  
Least Square ◽  
Board Structure ◽  
Best Interest ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Risk ◽  
The Impact

PurposeThis study aims to analyze the impact of corporate risk taking on the sustainability of firms in USA and Germany. As risk taking is an expensive phenomenon, the firm may shift the resources from stakeholder well-being to profit maximization of shareholders. Ultimately, risk taking results in the reduction of firm’s sustainability.Design/methodology/approachTo capture the impact of corporate risk taking, the corporate-governance variables, i.e. “independent board structure” and “board size,” were used as instrumental variables to control excessive corporate risk taking and restrict it at a healthy level. A sample of 3,387 unbalanced panel observations from USA and Germany, for the period 2004-2015, were assessed.FindingsThe results confirm that corporate risk taking has a negative and significant impact on the sustainability of firms.Research limitations/implicationsGovernment and policymakers in USA and Germany may introduce regulations to curb excessive corporate risk taking for sustainable corporations and sustainable society. This research suggests that corporate risk taking is not in the best interest of stakeholders.Originality/valuePrevious literature only finds the impact of sustainability on corporate risk taking and there is not a single study that examines the impact of corporate risk taking on the sustainability of a firm. Thus, this study contributes to existing literature on corporate risk taking and sustainability. The study further contributes by using the instrumental variable two stage least square.

scholarly journals The Impact of Public Guarantees on Bank Risk-Taking: Evidence from a Natural Experiment*

2013 ◽  
Vol 18 (2) ◽  
pp. 457-488 ◽  
Author(s):  
Reint Gropp ◽  
Christian Gruendl ◽  
Andre Guettler
Keyword(s):  
Risk Taking ◽  
Natural Experiment ◽  
Bank Risk ◽  
The Impact

scholarly journals The impact of company-specific and external factors on corporate risk taking: The case of Egyptian insurance companies

2013 ◽  
Vol 10 (3) ◽  
pp. 210-225
Author(s):  
Mohamed Sherif ◽  
Mahmoud Elsayed
Keyword(s):  
Risk Taking ◽  
Stock Prices ◽  
Risk Measures ◽  
External Factors ◽  
Insurance Companies ◽  
Method Of Moment ◽  
Life Insurers ◽  
Systematic Risks ◽  
Corporate Risk ◽  
The Impact

Using a two-way panel regression analysis with fixed and random effects and the generalized method of moment(GMM), we investigate the impact of both firm-specific and external factors on the risk taking of Egyptian insurance companies. We use hand-collected data of Egyptian insurance companies over the period from 2006 to 2011 to estimate the relationship between total and systematic risks as risk measures and the independent variables. Following Eling and Mark (2011) the extent of risk taking is quantified through variations in stock prices and these are explained by firm-specific and external factors. We find that differences in company size, interest rate level and economic development affect variations in stock prices. The analysis also highlights differences between the life and non-life insurers, with the non-life insurers exhibiting a higher level of risk (market and premium) and board independence. The pattern of results are qualitatively the same for non-life insurers but different for life insurers when we use GMM method.

Accounting Performance Goals in CEO Compensation Contracts and Corporate Risk Taking

2021 ◽  
Author(s):  
Clara Xiaoling Chen ◽  
Minjeong (MJ) Kim ◽  
Laura Yue Li ◽  
Wei Zhu
Keyword(s):  
Risk Taking ◽  
Ceo Compensation ◽  
Performance Goals ◽  
Target Setting ◽  
Public Companies ◽  
Compensation Contracts ◽  
Accounting Performance ◽  
Corporate Risk ◽  
The Impact ◽  
D Investment

This study provides the first large-sample archival evidence on the impact of three commonly used accounting performance goals (thresholds, targets, and maximums) in CEO compensation contracts on corporate risk taking. Using proxy statement disclosure on performance goals for CEOs of U.S. public companies, we find that lower thresholds and higher maximums are associated with greater corporate risk taking, and these results are more pronounced when CEOs have greater incentives to achieve accounting performance goals or have lower innate risk aversion. In addition, we find that target difficulty is not significantly associated with corporate risk taking after controlling for thresholds and maximums. Finally, we find that CEO compensation contracts are more likely to have lower thresholds and higher maximums when risk taking is more value-enhancing or when R&D investment is more profitable, consistent with boards setting performance goals to induce an appropriate amount of corporate risk taking. Our study contributes to the accounting literature on target setting and corporate risk taking by identifying accounting performance goals as a tool in executive compensation contract design to influence risk taking. This paper was accepted by Suraj Srinivasan, accounting.

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