Investigating the Relationship between Corporate Risk Taking and Financial Performance with Emphasis on Corporate Governance

Abstract

AbstractCorporate risk taking is important perspective related to performance.This paper is investigating the relationship between corporate risktaking and financial performance along with checking for the impactof corporate governance mechanism on risk and performance linkage.To achieve the mentioned goal 101 companies listed on Tehran StockExchange over the period of 2005 to 2012 (including 808 firm- years)were examined through correlation test and using the liner regressionmodel. Result show corporate risk taking have significant positiverelationship with financial performance. In addition, boardindependence have significant negative relationship with corporaterisk taking; while association of Institutional investor and board sizeand corporate risk taking is not significant. Findings also show thatboard independence, board size and institutional investor have directsignificant impact on the relationship between corporate risk takingand financial performance

Keywords

• institutional ownership
• board structure
• corporate risk taking
• financial performance