The Relation Between Corporate Risk Taking And Managerial Entrenchment

• Main Authors: Wang,Ji-Chong, 王吉崇
• Other Authors: Chan,Chia-Chung
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/30074476327005878753

碩士 === 東海大學 === 財務金融學系 === 100 === The purpose of our research is to review whether managers will adopt a strategy which called bank relationships to do entrenchment via the aspect of changing the manager. Owing to the past literatures emphasize that corporate risk is an important factor when managers consider entrenchment. Therefore, our research will investigate the relationship between managerial entrenchment and bank relationships through the perspective of corporate risk taking. Empirical evidences proved that there is a significant relationship between managerial entrenchment and risk taking of firms. Managers have incentives to lower risk taking of firms for their own benefit. In the empirical investigation about the relation between managerial entrenchment and risk taking, we have found out that the more serving years at one firm, the less risk taking of managers. When the managers are also as the board of directors or they have higher holding stock ratio in company, then they can take higher risks. Due to the increasing risks for firms, the turnover rate of mangers will increase. In addition, because the firms which have multiple bank relations will exist higher asymmetric information, firms will face lower financial risks, and managers will become more easier to do entrenchment. Our research not only discovered that firms will have higher risk taking under multiple bank relations, but also discovered the decline range of risk taking after change managers will smaller than the firms which didn’t have multiple bank relations. The result shows the possibilities that managers will use the strategy of multiple bank relations to do managerial entrenchment.