Impact of corporate insider, blockholder, and institutional equity ownership on firm risk taking

Article Abstract:

The nature of a firm's risk-taking behavior can significantly affect corporate performance. In an agency context, we examined the influence of equity ownership structure upon corporate risk taking. Results support our premise that the wealth portfolios of corporate insiders may influence firm risk taking. They also support our analysis of entrenchment theory and our presumption that financial and nonfinancial benefits or costs may, at high levels of stock ownership, induce executive decisions inconsistent with growth-oriented risk taking. Institutional owners exerted a significant, positive influence on risk taking, but the role of blockholders was negligible. Finally, ownership structure affected corporate risk taking in the presence of growth opportunities, represented by Tobin's q. (Reprinted by permission of the publisher.)

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Sources of motivation to choose employee ownership as an alternative to job loss

Article Abstract:

A survey of 943 employees of A & P stores in the Philadelphia area, which were soon to be shutdown, sought to determine differing characteristics between employees choosing employee ownership of their stores (pledgers) and those opting for shutdown (nonpledgers). Situational and attitudinal factors figured prominently in this distinction. Pledgers were generally associated with: higher unemployment rates and financial resources, a stronger belief in entrepreneurism and risk taking, and a greater commitment to collective ideals.

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Why do firms reduce business risk?

Article Abstract:

Two empirical tests designed to disentangle firms' motives for reducing business risk were performed. Results suggest that low business risk allows firms to acquire factors of production at lower costs, to operate more efficiently, or both. The findings are consistent with theories assuming both value maximization and efficient capital markets. (Reprinted by permission of the publisher.)

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