We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Identifying the Valuation Effects and Agency Costs of Corporate Diversification: Evidence from the Geographic Diversification of U.S. Banks.
- Authors
Goetz, Martin R.; Laeven, Luc; Levine, Ross
- Abstract
This paper assesses the impact of the geographic diversification of bank holding company (BHC) assets across the United States on their market valuations. Using two new identification strategies based on the dynamic process of interstate bank deregulation, we find that exogenous increases in geographic diversity reduced BHC valuations. We also find that the geographic diversification of BHC assets increased insider lending and reduced loan quality. Taken together, these findings are consistent with theories predicting that geographic diversity intensifies agency problems.
- Subjects
UNITED States; DIVERSIFICATION in industry; ECONOMIC geography; BANK holding companies; VALUATION; ASSETS (Accounting); DEREGULATION; BANKING industry ethics; CORRUPT practices in the banking industry; REGIONAL banks; INTERSTATE banking; DECENTRALIZATION in government
- Publication
Review of Financial Studies, 2013, Vol 26, Issue 7, p1787
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hht021