Does skin in the game help? Bank franchise value, managerial incentives and ‘going for broke’

Autor:	Shams Pathan, Mamiza Haq, Barry Williams
Rok vydání:	2015
Předmět:	050208 finance 05 social sciences Context (language use) Financial system Skin in the game General Business Management and Accounting Incentive Shareholder 0502 economics and business Value (economics) Deposit insurance Asset (economics) Business 050207 economics Panel data
Zdroj:	Australian Journal of Management. 41:271-298
ISSN:	1327-2020 0312-8962
DOI:	10.1177/0312896214539818
Popis:	The roles bank franchise value (‘skin in the game’) and CEO ownership play in determining bank risk are studied for large United States Bank Holding Companies. We find robust evidence of a convex relation between bank risk and each of CEO shareholding and franchise value, indicating that increases in each are initially risk decreasing, but as franchise value and CEO ownership increases so too does bank risk. Further, we find that low levels of franchise value combined with high CEO ownership result in managerial incentives aligning with those of shareholders, resulting in increased bank risk (‘going for broke’ or asset substitution). We argue that these results are consistent with those of Robert Merton, but in the context of franchise value rather than bank capital and deposit insurance, and accordingly offer some policy recommendations for regulatory monitoring of bank risk that are consistent with these results.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::fd00a0bef0559e7012d46e0d1c5c2502 https://doi.org/10.1177/0312896214539818 Zobrazit plný text záznamu