The influence of foreign equity and board membership on corporate strategy and internal cost management in Portuguese banks
Gulamhussen, Mohamed Azzim Guerreiro, Luís
Gulamhussen, Mohamed Azzim
Guerreiro, Luís
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2009-03
Journal
Management Accounting Research
Book
Publication Volume
20
Publication Issue
1
Publication Begin page
6
Publication End page
17
Publication Number of pages
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Abstract
This study examines the influence of foreign equity and board membership on corporate strategy and the management of internal costs of banks headquartered in Portugal using proprietary data maintained by the Central Bank. The findings reveal that foreign equity reduces both total and operating costs, and foreign board membership reduces domestic banks’ dependence on revenues from traditional areas of business and enhances the potential for generating revenues from non-traditional areas of business. These results are controlled for a variety of standard accounting ratios used in the literature. We argue that foreign equity and board membership forces banks to redirect corporate strategy and to reduce internal costs.
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Keywords
3501 Accounting, Auditing and Accountability, 3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour