Managerial Ownership,Risk-taking And Corporate Performance

Managerial Ownership has been a hot topic in the company’s salary incentive mechanism. Most studies in academic circles currently concentrated on the relationship between managerial ownership and corporate performance. Few articles study on risk-taking which is in the middle of the process. As China’s capital market is not yet mature and the economic environment is changing, the company face various kinds of uncertainty and business risk all the time. If enterprise is risk aversion,which tend to prudent investment in face of the uncertainty, they are likely to lose a great investment opportunities and make the enterprise stagnant because of the conservative strategy. If companies take the initiative to take risks within acceptable risk range, they select the project with high risk and hidden huge opportunities which will bring unexpected opportunities.Shareholders can disperse risks through capital market investment portfolio theory, so they are often "risk neutral". Manager usually work only in a company, therefore, they are "risk aversion" for the stability of the career. Shareholders who are risk neutral hope that the manages choose the project whose NPV(net present value) is greater than zero without taking into account the size of the risk. Managers who are risk aversion choose the project with low risk whose NPV is greater than zero, and they give up some project with high risk but the NPV is greater than zero. Therefore, the risk aversion behavior of manager will damage he value of shareholders, and is not conducive to long-term development of the company. Managerial ownership can effectively resolve this conflict of interest. When the managers has a certain equity, they will be more inclined to choose the project with high risk but the net present value is greater than zero because of interests convergence and promote the development of the company.This paper selects 2006-2014 listed companies as the research sample, using panel data analysis method including descriptive statistics and regression analysis to study the relationship among managerial ownership, risk-taking and corporate performance. The paper draws the following conclusions:(1) the managerial ownership can improve corporate performance; (2) the managerial ownership can improve the level of risk-taking; (3) There was no significant difference in the effect of managerial ownership risk in the different nature of the enterprise; (4) risk-taking can improve corporate performance; (5) risk-taking is the mediator variable of managerial ownership and corporate performance. Finally, according to the empirical results, this paper presents advice to improve the capital market, establish and improve the equity incentive mechanism and the prospects for follow-up research.Results of previous studies on risk-taking are mostly concentrated in the banking and other financial industries. This paper, through the research of enterprises’ risk-taking, can make people realize the importance that enterprises need to take the initiative to undertake a certain degree of risk and increase investment in research and innovation in order to truly promote development and progress of the enterprise in the rapid economic development environment.Enterprises to take the initiative to assume a certain degree of risk, increase research and innovation investment in order to truly promote enterprise development and progress. The result of this paper has enriched the research of enterprise risk at the present stage. Results of this research greatly enriched the study of risk in enterprise at this stage.