Controlling Families’ Risk Allocation in a Business Group

Joon Chae; Hyung Cheol Kang; Eun Jung Lee; Yu Kyung Lee

doi:10.1111/ajfs.12284

Controlling Families’ Risk Allocation in a Business Group

Joon Chae, Hyung Cheol Kang, Eun Jung Lee, Yu Kyung Lee

School of Business Administration

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

This paper explores family business groups and their motivation for risk taking in each affiliate. We study whether the controlling family determines the level of risk taken by an affiliate in its business group based on the amount of family wealth that is invested in the affiliate. We find that the affiliates in which the controlling family has more (less) investment take less (more) risk. Our results indicate that the controlling family decides the riskiness of each affiliate based on the family’s interests at both the firm level and the business-group level.

Original language	English
Pages (from-to)	67-98
Number of pages	32
Journal	Asia-Pacific Journal of Financial Studies
Volume	49
Issue number	1
DOIs	https://doi.org/10.1111/ajfs.12284
State	Published - 1 Feb 2020

Keywords

Business group
Controlling shareholder
Family firms
Risk taking

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10.1111/ajfs.12284

Cite this

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title = "Controlling Families{\textquoteright} Risk Allocation in a Business Group",

abstract = "This paper explores family business groups and their motivation for risk taking in each affiliate. We study whether the controlling family determines the level of risk taken by an affiliate in its business group based on the amount of family wealth that is invested in the affiliate. We find that the affiliates in which the controlling family has more (less) investment take less (more) risk. Our results indicate that the controlling family decides the riskiness of each affiliate based on the family{\textquoteright}s interests at both the firm level and the business-group level.",

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Controlling Families’ Risk Allocation in a Business Group

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Keywords

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