Large shareholder participation behaviors, managers’ risk-taking and firm innovation performance: A shareholder activism perspective

Abstract

Purpose

Focusing on internal corporate governance, the purpose of this paper is to apply the shareholder activism perspective to consider how large shareholder participation behaviors might influence firm innovation performance. Specifically, “confrontationally strategic intervention” and “cooperatively strategic consensus” participation behaviors are examined and hypothesized to have different effects on managers’ risk-taking and firm innovation performance.

Design/methodology/approach

Drawing on 182 Chinese firm samples, this paper applies hierarchical ordinary least-squares regression analysis to test the proposed hypotheses.

Findings

The results show that strategic intervention was negatively associated with managers’ risk-taking and firm innovation performance, while strategic consensus positively affected managers’ risk-taking and firm innovation performance. Moreover, managers’ risk-taking fully mediated the influence of strategic intervention on firm innovation performance, whereas it partially mediated the influence of strategic consensus on firm innovation performance.

Originality/value

The study extends research on shareholder participation by construing that large shareholders’ participation behaviors can significantly influence managers’ risk-taking and corporate innovation performance, further deepening the understanding of the influences of large shareholders on the firm-level outcomes. The theoretical and practical implications of this finding are also discussed.

Citation

Zhang, F., Yang, J., Xu, Z. and Zhu, G. (2018), "Large shareholder participation behaviors, managers’ risk-taking and firm innovation performance: A shareholder activism perspective", Nankai Business Review International, Vol. 9 No. 1, pp. 99-115. https://doi.org/10.1108/NBRI-04-2017-0017