Foreign investors and corporate risk taking behavior in an emerging market

Abstract

This paper investigates the impact of foreign ownership on the corporate risk taking activity at the firm level in Vietnam. Employing different techniques of panel data estimation, we find that foreign investors help to reduce the corporate risk taking activities. The result supports the notion that foreign investors in Vietnam stock market focus on long run perspectives rather than short term gain. This finding has implications in recognizing the importance of foreign investors in emerging markets.