Takeovers Improve Firm Performance: Evidence from the Banking Industry

Schranz, Mary S.

doi:10.1086/261877

Cited by 101 publications

(37 citation statements)

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“…(2) relating to blockholder ownership are similar to those for insider ownership, with none of the variables being significant. The weak findings for insider and blockholder ownership are consistent with Agrawal and Knoeber (1996), Mak and Li (2001) but conflict with those of Demsetz and Lehn (1985) and Schranz (1993).…”

Section: [Insert Table 3 Here]mentioning

confidence: 63%

“…In banking, this approach has been adopted by a number of authors, among whom Schranz (1993) and Booth et al (2002) who look at the effect of the presence of regulation in the banking industry on the use of other corporate control mechanisms, designed to provide managers with incentives to maximize firm value. Schranz (1993) looks at the effect of the restriction of takeover activity in some states on the use of other corporate control mechanisms, such as the concentration of equity ownership and management ownership of stock, and on firm performance.…”

Section: Introductionmentioning

confidence: 99%

“…Schranz (1993) looks at the effect of the restriction of takeover activity in some states on the use of other corporate control mechanisms, such as the concentration of equity ownership and management ownership of stock, and on firm performance. Using a simultaneous equations framework she finds that when takeover activity is restricted, banks have higher levels of managerial ownership and equity concentration.…”

Section: Introductionmentioning

confidence: 99%

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Board structure, ownership structure and firm performance: evidence from banking

Belkhir

2009

Applied Financial Economics

109

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RésuméCet article examine les relations qui puissent exister entre les caractéristiques de la structure de propriété et du conseil d'administration dans un échantillon de 260 banques commerciales et banquescaisses d'épargne. Ces caractéristiques de gouvernance, destinées à réduire les problèmes d'agence entre actionnaires et dirigeants, sont la participation des dirigeants dans le capital, la participation d'actionnaires majoritaires dans le capital, la proportion des administrateurs externes, la structure de leadership du conseil d'administration, et la taille du conseil d'administration. Utilisant la méthode des doubles moindres carrés, nous présentons des résultats qui favorisent l'idée selon laquelle les banques substituent entre les différents mécanismes de gouvernance qui alignent les intérêts des actionnaires et dirigeants. Ces résultats suggèrent que les régressions par les moindres carrés ordinaires (MCO) de mesures de la performance bancaire sur des mécanismes individuels de gouvernance peuvent induire en erreur. En effet, les estimations révèlent qu'il y a des relations statistiquement significatives entre la performance et la participation des dirigeants et des actionnaires majoritaires dans le capital lorsque les MCO sont utilisés. Cependant, ces relations statistiquement significatives disparaissent lorsque le cadre de travail des équations simultanées est utilisé. Ensemble, ces résultats suggèrent que les banques utilisent de manière optimale les différents mécanismes de gouvernance qui sont à leur disposition. AbstractThis paper examines the interrelations among five ownership and board characteristics in a sample of 260 bank and savings-and-loan holding companies. These governance characteristics, designed to reduce agency problems between shareholders and managers, are insider ownership, blockholder ownership, the proportion of outside directors, board leadership structure, and board size. Using two-stage least squares regressions, we present evidence of interdependencies between board and ownership structures. The results suggest that banks substitute between governance mechanisms that align the interests of managers and shareholders. These findings suggest that cross-sectional OLS regressions of bank performance on single governance mechanisms may be misleading. Indeed, we find statistically significant relationships between performance and insider ownership and blockholder ownership when using OLS regressions. However, these statistically significant relationships disappear when the simultaneous equations framework is used. Together, these findings are consistent with optimal use of each governance mechanism by banks.Keywords : Corporate governance, board structure, ownership structure, performance, banking, simultaneous equations.JEL classification : G21, G32, G34. * This paper was written while I was a Fulbright visiting scholar at the FIREL department of the University of North Texas. I am grateful to Christophe Hurlin and Mazhar Siddiqi for helpful comments and to JeanPaul Pollin for his...

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Section: [Insert Table 3 Here]mentioning

confidence: 63%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Board structure, ownership structure and firm performance: evidence from banking

Belkhir

2009

Applied Financial Economics

109

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“…As the level of firm profitability is known to affect firm growth, we include the net profit before interest and taxes, divided by sales variable. This follows the method employed by Machin and Van Reenen (1993), Schranz (1993) and Loughran and Ritter (1997). In addition, as the age of a firm can affect its growth performance, we include a longevity dummy variable, which takes on the value of 1 if the firm has operated for at least 10 years prior to economic restructuring policy, and 0 otherwise.…”

Section: Methodology and Description Of Variablesmentioning

confidence: 99%

“…Profitability E t / Sales t . The ratio of earnings before interest and taxes to sales (Machin and Van Reenen, 1993;Schranz, 1993;Loughran and Ritter, 1997 Table 6 The effect of SPCS and other explanatory variables on firms' Tobin's Q1 and TQ2 …”

Section: Sizementioning

confidence: 99%