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How Sensitive Are Bank Managers to Shareholder Value?

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  • Selçuk Caner
  • Süheyla Özyıldırım
  • A. Ungan

Abstract

We test for the existence of market discipline by shareholders of banks with a wide range of ownership structures. Discipline by shareholders manifests itself through monitoring banks’ level of risk as well as through influencing banks’ management actions. We find that shareholders utilize the relation between stock returns and different types of risk measures to monitor risky banks. Shareholders partially influence bank management by responding to decreasing stock returns with a demand to improve loan quality. Moreover, the influence on management in small banks is more pronounced compared to large banks. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Selçuk Caner & Süheyla Özyıldırım & A. Ungan, 2012. "How Sensitive Are Bank Managers to Shareholder Value?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 42(3), pages 187-205, December.
    • Handle: RePEc:kap:jfsres:v:42:y:2012:i:3:p:187-205
    DOI: 10.1007/s10693-011-0118-7
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    More about this item

    Keywords

    Market discipline; Stock returns; Bank monitoring; Shareholder influence; G20; G21;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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