چکیده ای از مقاله

We investigate the link between firm size and risk-taking among financial institutions during the period of 1998-2008 and make three contributions. First, size is positively correlated with risk-taking measures even when controlling for other observable firm characteristics, such as market-to-book value ratio, corporate governance, and ownership structure. This is consistent with the notion that “too-big-to-fail” policies distort the risk incentives of financial institutions. Second, a simple decomposition of the primary risk measure, the Z-score, reveals that financial firms engage in excessive risk-taking mainly through increased leverage. Third, we find that bank corporate governance measured as the median director dollar stockholding has a substantial impact on reducing firms’ risk-taking.