The Exit Threat of Non-controlling Major Shareholders and Corporate Financial Risk

Abstract

Corporate governance plays a crucial part in corporate financial risk but the traditional means of corporate governance are limited. The means of corporate governance based on the exit threat of non-controlling major shareholders have been paid more and more attention. Based on this, this paper selects the China's A-share non-financial listed corporates from 2011 to 2021 as samples to explore the relationship between the exit threat of non-controlling major shareholders and corporate financial risk. It is found that exit threat can lower the financial risk of corporates; the reduction effect is more significantly for large scale and state-owned companies; high ownership concentration and high return on assets can strengthen the reduction effect of the exit threat on financial risk. This paper confirms the governance role of exit threat, and provides a new way to reduce financial risk for companies.