IMPACT OF CORPORATE INSIDER, BLOCKHOLDER, AND INSTITUTIONAL EQUITY OWNERSHIP ON FIRM RISK-TAKING

The nature of a firm's risk-taking behavior can significantly affect c orporate performance, In an agency context, we examined the influence of equity ownership structure upon corporate risk taking. Results supp ort our premise that the wealth portfolios of corporate insiders may i nfluence firm risk taking, They also support our analysis of entrenchm ent theory and our presumption that financial and nonfinancial benefit s or costs may, at high levels of stock ownership, induce executive de cisions inconsistent with growth-oriented risk taking. Institutional o wners exerted a significant, positive influence on risk taking, but th e role of blockholders was negligible. Finally, ownership structure af fected corporate risk taking in the presence of growth opportunities, represented by Tobin's q.