International evidence about the influence of large shareholders on corporate risk taking

This paper analyzes the relationship between ownership structure (shareholders' stake and identity) and corporate risk taking for a sample of companies from 21 OECD countries for the period 2001-2008. Our main contribution is considering simultaneously the effect of growth opportunities and the institutional environment. Our results suggest that growth opportunities create incentives to the largest shareholder to take (avoid) risk when the firm has (does not have) growth opportunities. We also find a trend to the alignment of interests between the largest shareholder and the other large shareholders, so that the latter support the risk policy of the former. Finally, the identity of the largest shareholder is relevant, being family firms the least prone to excessive corporate risk exposure.