We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
PRE-CRISIS DETERMINANTS OF US BANK CHARTER VALUES.
- Authors
Fortin, Rich; Goldberg, Gerson M.; Roth, Greg
- Abstract
We analyze factors related to U.S. bank holding company (BHC) charter values shortly before the current (2007-2010) financial crisis began to unfold. Using a sample of large BHCs, the evidence suggests that BHCs with riskier capital structures, stronger shareholder rights, and increased CEO risk-taking incentives were valued more highly by shareholders. Additional evidence indicates that increases in insider ownership (beyond a moderate level) also increases BHC charter value. Surprisingly, ownership by large outside shareholders is unrelated to charter value. The main conclusions from our study are that BHCs with more shareholder-friendly corporate governance and BHCs with riskier characteristics were valued more highly by shareholders in the period before the financial crisis. These results should be of interest to many banking stakeholders, including analysts, shareholders, and regulators.
- Subjects
UNITED States; BANK holding companies; BANKING industry; FINANCIAL crises; CORPORATE governance; CAPITAL structure; STOCKHOLDERS' pre-emptive rights
- Publication
Academy of Banking Studies Journal, 2011, Vol 10, Issue 2, p55
- ISSN
1939-2230
- Publication type
Article