Non-executive directors and corporate risk-taking: Evidence from China

This study empirically examines the relationship between non-executive directors and corporate risk-taking. The findings show that non-executive directors could significantly improve the risk-taking level of corporations. Non-executive directors reduce corporate agency costs and alleviate financing constraints, thus promoting a corporation's risk-taking level. Further research shows that the positive impact of non-executive directors on corporate risk-taking is weakened by being state-owned, higher executive incentives, better external supervision, higher ownership concentration, higher management age and greater uncertainty in the external environment. Additionally, non-executive directors appointed by both controlling and non-controlling shareholders play a positive role in promoting corporate risk-taking.