The Impacts of Corporate Governance on Business Risk Attitudes：A Prospect Theory Approach

• Main Authors: LO, HSING-TZU, 駱幸子
• Other Authors: LIN, MEI-CHEN
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/n65sw9

碩士 === 國立臺北大學 === 國際財務金融碩士在職專班 === 106 === This study discusses the impact of corporate governance on corporate remuneration and enterprise’s attitude to take risk from the perspective prospect theory. There are 9905 records in total 15 years period from 2000 to 2015 in this study. Firstly referring to the research design of Gompers, Ishii & Metrick (2003), this study constructs a set of comprehensive indexes of corporate governance as substitution variable for evaluating the corporate governance mechanism based on the internal corporate governance mechanism, and sets by following the risk model (Kliger and Tsur, 2011) for multiple regression analysis. The results show that: when the company’s performance is above the median of the industry, the company avoids risks; when the performance is below the median of the industry, the company becomes a risk lover; there is a significant non-linear relationship between risk and remuneration, which conform to the perspective of prospect theory. After the financial crisis, when the company performance is below the median of the industry, the company governs the weakening tendency of seeking risk. It implies that, through the internal corporate governance mechanism, the company weakens the irrational decision-making behaviors of risk love from the prospect theory when the decision maker is in the loss status. The company performance is better and can gain higher evaluation from investors when its performance is below the median of the industry through observing the relationship between corporate governance and Tobin’s Q, which reflects the more corporate governance encouraged from investors.