Ownership concentration, corporate governance, and firm’s risk-behavior: evidence from Thailand

Abstract

The relationship among the ownership concentration, corporate governance, and firm risk are investigated in this study. The sample for this study include all the firm listed in Thailand Stock Exchange for the time period from 2010 to 2019. In this study, both direct and indirect relationship are investigated. The results shows that ownership concentration has positive significant effect on firm risk in the case of Thailand. The main explanation for this evidence is based on the socio-emotional wealth and limited liability feature of the listed firms. Meanwhile, corporate governance does not seem to have any significant impact on risk. Focusing on the incremental or indirect effect, corporate governace also does not help alleviate the problem of the insider trading or exploitation caused my major shareholders. Therefore, ownership concentrations still have significant impact on firm risk, regardless of how good governance practice it has. Despite of no moderating role in the relationship between ownership concentration on risk, corporate governance does play a significant moderating role in reducing an inappropriate performance effect on firm risk. Firms having high CG score tends to have lower performance effect on risk relative to those having low CG score. Moreover, lead-lag effect of corporate governance is investigated, evidence from our study show no sign of the lead-lag effect for the governance factors.