Last Updated 08 Apr 2020

Corporate Governance and its Impact on Firm Risk

Words 318 (1 page)
Views 159

This time period was selected based on the ease of availability of data for the variables. BRIEF SUMMARY: Corporate governance measures like board structure, compensation structure and ownership structure are determined by one another, and by variables such as risk, cash flows, firms' size and regulations etc. Firm risk has a role to play in firm performance, because firms that take more risk generally have higher returns. Firms that engage in risky projects are expected to yield better returns that those which lack the appetite to take asks.

However, excessive risk taking may prove to be fatal for a firm Family Ownership and Firm Risk - studies the impact of corporate governance (through family control, bank control and ownership concentration) on risk taking of Japanese firms. Bank Ownership and Firm Risk - Banks are expected to have low risk-taking preferences and are most likely to avoid risky ventures. Ownership Structure and Firm Risk - Managerial ownership plays a significant role in firm's risk-taking.

Lesser ownership in this regard may hold back the managers to indulge in risky projects. Board Independence and Firm Risk - Structuring of a firm's board of directors also plays a crucial role in reducing the agency costs. Therefore, the role Of the executive board's structure is also crucial for the firm's value. Non-executive directors on the board of directors, acting on the part of external shareholders, are generally expected to monitor firm' s strategy and decision-making in this regard.

Order custom essay Corporate Governance and its Impact on Firm Risk with free plagiarism report

GET ORIGINAL PAPER

CRITIQUE: The study on corporate governance has received considerable attention in the past decade or so due to the significant role of corporate governance in enhancing the firms' performance. This research has investigated the impact f various corporate governance measures have been on firm performance and firm value. This study can also contribute to the corporate world by incorporate a vast range of corporate governance variables in the analysis, including bank ownership, family ownership, managerial ownership and board independence.

This essay was written by a fellow student. You can use it as an example when writing your own essay or use it as a source, but you need cite it.

Get professional help and free up your time for more important courses

Starting from 3 hours delivery 450+ experts on 30 subjects
get essay help 124  experts online

Did you know that we have over 70,000 essays on 3,000 topics in our database?

Cite this page

Explore how the human body functions as one unit in harmony in order to life

Corporate Governance and its Impact on Firm Risk. (2018, May 21). Retrieved from https://phdessay.com/corporate-governance-and-its-impact-on-firm-risk/

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.

Hire writer