How does ownership structure invfluence bank risk? Analyzing the role of managerial incentives


Autoria(s): López-Puertas Lamy, Mónica
Contribuinte(s)

Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa

Data(s)

01/11/2012

Resumo

This paper analyzes how ownership concentration and managerial incentives influences bank risk for a large sample of US banks over the period 1997-2007. Using 2SLS simultaneous equations models, we show that ownership concentration has a positive total effect on bank risk. This is the result of a positive direct effect, which reflects monitoring and opportunistic behavior, and a negative indirect effect, which works through the design of managerial incentive contracts and reflects shareholder preferences toward risk. Large shareholders reduce bank risk by reducing the sensitivity of CEO wealth to stock volatility (Vega) and by increasing the CEO pay-performance sensitivity (Delta). In addition, we show that the direct and indirect effect of ownership concentration on bank risk depends on the type of the largest shareholder (a family, a bank, a corporation or an institutional investor), as well as, on the total shareholding held by each type as a group. Our results suggest that the positive relation between ownership concentration and risk is not the result of preferences towards more risk. Rather, they point at opportunistic behavior of large shareholders.

Formato

67 p.

Identificador

http://hdl.handle.net/2072/213579

Idioma(s)

eng

Publicador

Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa

Relação

Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa);12/8

Direitos

info:eu-repo/semantics/openAccess

L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons: http://creativecommons.org/licenses/by-nc-nd/3.0/es/

Fonte

RECERCAT (Dipòsit de la Recerca de Catalunya)

Palavras-Chave #Gestió del risc #Opcions (Finances) #Bancs -- Estats Units d'Amèrica #336 - Finances. Banca. Moneda. Borsa
Tipo

info:eu-repo/semantics/workingPaper