Cardiff University | Prifysgol Caerdydd ORCA
Online Research @ Cardiff 
WelshClear Cookie - decide language by browser settings

Does bank stakeholder orientation enhance financial stability?

Leung, Woon Sau, Song, Wei and Chen, Jie 2019. Does bank stakeholder orientation enhance financial stability? Journal of Corporate Finance 56 , pp. 38-63. 10.1016/j.jcorpfin.2019.01.003
Item availability restricted.

[img] PDF (Final manuscript) - Accepted Post-Print Version
Restricted to Repository staff only until 11 July 2020 due to copyright restrictions.
Available under License Creative Commons Attribution Non-commercial No Derivatives.

Download (808kB)

Abstract

Using the staggered enactment of constituency statutes across US states, we find that banks with directors whose legal duties are expanded to consider stakeholder and long-term interests significantly reduce risk-taking by increasing capital and shifting to safer borrowers. Additionally, we find that the effect of statute enactment on bank performance is insignificant on average but significantly positive for banks that take excessive risk. Furthermore, we find that banks that previously received a statute enactment fared significantly better during the crises. Our findings support the increasing calls for greater emphasis on stakeholder interests amidst the current bank regulatory and governance reforms.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HG Finance
Uncontrolled Keywords: Bank risk-taking; Stakeholder orientation; Constituency statutes; Fiduciary duties; Financial stability.
Publisher: Elsevier
ISSN: 0929-1199
Date of First Compliant Deposit: 14 January 2019
Date of Acceptance: 9 January 2019
Last Modified: 19 Oct 2019 07:44
URI: http://orca.cf.ac.uk/id/eprint/118330

Actions (repository staff only)

Edit Item Edit Item

Downloads

Downloads per month over past year

View more statistics