Corporate Governance and Risk Taking: Evidence from Italian Listed Companies

Abstract

This study uses a regression model and data related to board of directors' characteristics to investigate the association between corporate governance and firms' risk levels. Building on the agency theory, we analyze 108 Italian listed companies to explore the interaction between board size and directors' attendance at board meetings and corporate risk taking. Results show that larger boards contribute to lowering firms' risk. We also find that, as board members attendance at board meeting increases, risk faced by firms decreases. Our study contributes to the extant literature as it provides evidence of the role of outside and inside directors in mitigating managers' risky practices.