Abstract
Ever since major accounting scandals and corporate collapses of the early 2000’s, the improved risk taking and the lax approach to risk management procedures, which are viewed as contributing factors to the market breakdown that occurred in the international market and, in particular, in the U.S. in 2007, have led to an increased awareness of the importance of managing risk on the part of listed companies. Risk management has gained importance in the definition of what it means to be the best and most efficient corporate governance structure and mechanism, as it can play a fundamental role in helping to achieve the company’s target. Also disclosure related to risk management is fundamental for the efficient functioning of capital markets since it helps to improve corporate transparency and to reduce the information asymmetry between insiders and outsiders.
 
 This paper aims to investigate the relationship between ownership structure and corporate risk-taking behavior and disclosure, as a tool for protecting shareholders, among Italian listed companies. The analysis is devoted to the Italian stock market because it is strongly characterized by a high ownership concentration and by the presence of a family ownership model; and this scenario makes the Italian one an interesting case to study. Based on a sample of 233 Italian listed companies, through a multivariate regression, we find that a high level of ownership concentration is positively related to a firms' low level of risk taking by the board of directors, so giving interesting insights to regulators and practitioners, as well as for further research.
Highlights
Companies, regardless of their business sector, carry out their activities in a very complex socio-economic environment, where it is essential to perform functions related to risk monitoring (Caldarelli et al, 2016)
Using all public information and public documents on the company’s website, we study 10 different issues that we consider to be indicators of high-risk awareness by the firm and, by means of a multivariate regression, we test whether a high level of ownership concentration is positively related to firms’ low risk taking by the board of directors, intended as risk management policies and disclosure adopted
Taking into consideration all the varied practical implications, this study provides insights for regulators to enhance the adoption of policies aimed at managing and communicating corporate risks, while introducing more restrictive policies for companies with concentrated ownership that are less proactive and fair in the implementation of comprehensive risk management practices and disclosure
Summary
Regardless of their business sector, carry out their activities in a very complex socio-economic environment, where it is essential to perform functions related to risk monitoring (Caldarelli et al, 2016). Organizations operate in increasingly dynamic, complex, and unpredictable contexts (McMullen & Shepherd, 2006), and exploring and managing related risks is a prerequisite (Alchian, 1950). Risk management has considerable implications for competitiveness and business; it enables, for instance, the development of a potential loss reduction strategy while taking advantage of windows of opportunity (Radner & Shepp, 1996). By definition, characterized by the existence of risk that cannot be completely eliminated but that may, at least, be managed in a way that minimizes them. The combination of risks to which companies are exposed is as complex as the enterprise system itself, and it requires both a professional and profound approach (OECD, 2014)
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