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Corporate Capital Structure and Regulation of Bank Equity Holdings: Some International Evidence

Author

Listed:
  • Jan Bartholdy

    (University of Otago, New Zealand)

  • Glenn W. Boyle

    (University of Otago, New Zealand)

  • Roger D. Stover

    (Iowa State University, U.S.A.)

Abstract

Using data from six OECD countries, we examine the proposition that the costs associated with shareholder–debtholder agency conflicts can be reduced by allowing banks to hold equity in the firms to which they lend. Although the sensitivity of leverage to potential wealth expropriation is indeed significantly lower in Japan than in the U.S., no observable difference exists between the U.S. and the non–Japanese countries where banks are permitted to hold corporate equity. This "Japan effect" does not appear to be due to the Japanese keiretsu structure. We conclude that any differences in the debt–agency relationship between Japan and the U.S. are unlikely to be due to differences in restrictions on bank equity holdings

Suggested Citation

  • Jan Bartholdy & Glenn W. Boyle & Roger D. Stover, 1997. "Corporate Capital Structure and Regulation of Bank Equity Holdings: Some International Evidence," Multinational Finance Journal, Multinational Finance Journal, vol. 1(1), pages 63-80, March.
    • Handle: RePEc:mfj:journl:v:1:y:1997:i:1:p:63-80
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    References listed on IDEAS

    as
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    Cited by:

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    2. Rossi, Fabrizio & Barth, James R. & Cebula, Richard J., 2018. "Do shareholder coalitions affect agency costs? Evidence from Italian-listed companies," Research in International Business and Finance, Elsevier, vol. 46(C), pages 181-200.
    3. Habib-ur Rahman & Muhammad Waqas Yousaf & Nageena Tabassum, 2020. "Bank-Specific and Macroeconomic Determinants of Profitability: A Revisit of Pakistani Banking Sector under Dynamic Panel Data Approach," IJFS, MDPI, vol. 8(3), pages 1-19, July.

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