The Influence of Managerial Ownership on Bank Market Value, Performance, and Risk: Evidence from Banks Listed on the Stoxx Global Index
Gulamhussen, Mohamed Azzim Pinheiro, Carlos Sousa, Rui
Gulamhussen, Mohamed Azzim
Pinheiro, Carlos
Sousa, Rui
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Publication Type
Journal article
Editor
Supervisor
Publication Year
2012-06
Journal
Journal of International Financial Management and Accounting
Book
Publication Volume
23
Publication Issue
2
Publication Begin page
121
Publication End page
153
Publication Number of pages
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Abstract
Abstract We follow agency theory to assess the influence of managerial ownership on the market value, performance, and risk of 123 listed banks in 23 countries included in the STOXX G lobal I ndex in 2007 and 2010. After controlling for bank characteristics, regulatory restrictions, and macroeconomic conditions, our findings show a positive relation between managerial ownership and both market value ( T obin's Q ) and performance ( ROA and ROE ). Moreover, we find a negative relation between managerial ownership and risk ( EDF , NPL / L , and Z ‐ SCORE ). Bank market value and performance is a non‐linear, inverse U ‐shaped function of managerial ownership. The negative relation between managerial ownership and bank risk is also non‐linear and U ‐shaped. Our results remain robust to reverse causality. In their effort to immunize the global financial system from systemic risks, central banks and practitioners should find our results relevant for regulation purposes.
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Keywords
3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour