Investigating the Relationship between Corporate Risk Taking and Financial Performance with Emphasis on Corporate Governance

Corporate risk taking is important perspective related to performance. This paper is investigating the relationship between corporate risk taking and financial performance along with checking for the impact of corporate governance mechanism on risk and performance linkage. To achieve the mentioned goal 101 companies listed on Tehran Stock Exchange over the period of 2005 to 2012 (including 808 firm- years) were examined through correlation test and using the liner regression model. Result show corporate risk taking have significant positive relationship with financial performance. In addition, board independence have significant negative relationship with corporate risk taking; while association of Institutional investor and board size and corporate risk taking is not significant. Findings also show that board independence, board size and institutional investor have direct significant impact on the relationship between corporate risk taking and financial performance.