Family ownership and risk taking

We study the relation between a controlling family's ownership and their company's risk taking behavior. By investigating comprehensive ownership data in Korea where most companies have controlling families, we find that non-linear U-shaped relation exists between family ownership and a firm's risk taking. Our results are robust in various tests considering endogeneity problems and with different proxies. We argue that a family with less ownership takes less risk for pursuing their private benefit, while a family with more ownership aligns their interest with their company's by taking more value enhancing risky projects.