Search Results
Working Paper
When target CEOs contract with acquirers: evidence from bank mergers and acquisitions
This paper investigates the impact of the target chief executive officer's (CEO) postmerger position on the purchase premium and target shareholders' abnormal returns around the announcement of the deal in a sample of bank mergers during the period 1990?2004. We find evidence that the target shareholders' returns are negatively related to the postmerger position of their CEO. However, these lower returns are not matched by higher returns to the acquirer's shareholders, suggesting little or no wealth transfers. Additionally, our evidence suggests that the target CEO becoming a senior officer ...
Working Paper
The “risk-adjusted” price-concentration relationship in banking
Price-concentration studies in banking typically find a significant and negative relationship between consumer deposit rates (i.e., prices) and market concentration. This relationship implies that highly concentrated banking markets are ?bad? for depositors. It also provides support for the Structure-Conduct-Performance hypothesis and rejects the Efficient-Structure hypothesis. However, these studies have focused almost exclusively on supply-side control variables and have neglected demand-side variables when estimating the reduced form price-concentration relationship. For example, previous ...
Working Paper
Investment opportunity set, product mix, and the relationship between bank CEO compensation and risk-taking
The product mix changes that have occurred in banking organizations during the 1990s provide a natural experiment for investigating how firms adjust their executive compensation contracts as their mix of businesses changes. Deregulation and new technology have eroded banking organizations? comparative advantages and have made it easier for nonbank competitors to enter banking organizations? lending and deposit-taking businesses. In response, banking organizations have shifted their sale mix toward noninterest income by engaging in municipal revenue bond underwriting, commercial paper ...
Working Paper
Bank capital ratios across countries: why do they vary?
This paper extends the literature on bank capital structure by modeling capital structure as a function of important public policy and bank regulatory characteristics of the home country, as well as of bank-specific variables, country-level macroeconomic conditions, and country-level financial characteristics. The model is estimated with annual data from 1992 to 2005 for an unbalanced panel of the seventy-eight largest private banks in the world headquartered in twelve industrial countries. The results indicate that bank capital ratios are significantly affected in the hypothesized directions ...
Working Paper
The value of banking relationships during a financial crisis: evidence from failures of Japanese banks
In this paper, we provide evidence on the value of banking relationships by examining the stock market valuation impact of three large bank failures in Japan in 1997 and 1998 on their clients and the clients of surviving banks. Bank failures are theorized to have adverse consequences for other firms in general and for customers of the failed institutions in particular. Firms that are customers of the failed institution may be adversely affected because they may lose an ongoing source of funding and need to incur the expense of search and providing financial and other information about ...
Journal Article
Performance and access to government guarantees: the case of small business investment companies
This article analyzes the performance of small business investment companies (SBICs) that are chartered and regulated by the Small Business Administration (SBA). Our principal finding is that poor performance over the 1986-91 period is associated with high usage of funds from the SBA.