Leung, WS, Song, W and Chen, J orcid.org/0000-0002-4076-7121 (2019) Does bank stakeholder orientation enhance financial stability? Journal of Corporate Finance, 56. pp. 38-63. ISSN 0929-1199
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.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2019 Elsevier B.V. All rights reserved. This is an author produced version of a paper published in Journal of Corporate Finance. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Bank risk-taking; Stakeholder orientation; Constituency statutes; Fiduciary duties; Financial stability |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 15 Jan 2019 13:39 |
Last Modified: | 11 Jul 2020 00:38 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.jcorpfin.2019.01.003 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:141048 |