Social Security Fund Shareholding and Corporate Risk Taking:Excessive Oversight or Risk Governance
Social Security Fund(SSF)has a major mission of social security and pension insurance for the people's livelihood at the peak of China's aging population,and capital preservation and"safety"are the main objectives of SSF investment.As a long-term independent institutional investor and a top ten shareholder of corporate holdings,the SSF may play a role of"risk governance"and"excessive supervision"in the high-risk investments of en-terprises.This paper examines the impact of SSF on corporate risk-taking,and examines its mechanisms and economic consequences.Using data from Chinese listed companies from 2003-2021,the study finds that SSF significantly reduce the level of risk-taking of shareholding firms.The results of the mechanism test support the"risk governance"rather than"excessive supervision"role of SSF.First,while discouraging risk-taking that undermines firm value(inefficient investment and high leverage),SSFs promote risk-taking that enhances firm value(R&D investment).Second,SSF enhance the stickiness of executive compensation to a certain extent,reduce the sensitivity,turnover probability and frequency of mandatory executive turnover,and optimize the firm's failure tolerance.Further tests show that SSF have a positive risk-taking effect by reducing the level of corporate risk-taking,promoting the same increase in firm performance and market value.The research in this paper has some reference value for promoting the preservation and apprecia-tion of SSF and optimizing the quality of corporate risk-taking.
Social Security Fund(SSF)Corporate Risk-TakingCorporate GovernanceExcessive OversightCorporate Risk-Taking Effect