Finance

Internal medicine

Business

Investment (military)

Financial crisis

Corporate governance

Politics

World Wide Web

Macroeconomics

Nexus (standard)

Political science

Embedded system

Economics

Index (typography)

Shock (circulatory)

Computer science

Monetary economics

Financial system

Medicine

PLoS ONE

In this study we assess the impact of corporate governance on the risk investment behavior of firms and its implications on firms’ growth rate. Using a sample of non-financial companies from 10 countries over a period leading to the recent global financial crisis, we documented that the corporate governance has a nonlinear (inverted U-shape) impact on the companies’ investment risk, meaning that the investment risk is increasing up to a level of corporate governance of 0.61 (as measured by our comprehensive index), while at higher levels of corporate governance the investment risk is decreasing. For the models of sales growth and assets growth it is shown that predicted investment risk has a positive effect on firms’ growth measures. Moreover, the two growth models are not moving independently and a shock to one of the growth measures (sales or assets) affects the other growth measure in the same direction. Additionally, we evaluated the effect of financial crisis on both the growth measures and the risk measure. The effect of financial crisis was captured in both measures in 2009, with higher impact on the growth of sales.

The nexus between corporate governance, risk taking, and growth