Impact of Corporate Ownership on Risk-Taking and Returns at Thrift Institutions

Impact of Corporate Ownership on Risk-Taking and Returns at Thrift Institutions
Author: Walter Dolde
Publisher:
Total Pages: 0
Release: 2006
Genre:
ISBN:

This paper examines the relationship between ownership structure, other corporate governance variables, and firm risk-taking and returns for the period 1990 to 2003. Our results suggest that the persistent, underlying relationship between insider ownership and risk-taking is U-shaped for both stock and operating returns. The Sharpe ratio for operating returns exhibits an inverted U-shaped association with insider ownership. These observations are consistent with insiders achieving the efficient frontier between risk and return, i.e. although risk-taking varies with the level of ownership, average returns are higher when risk is higher. We also find strong evidence of negative linear relationships between institutional ownership and both operating and stock volatility and positive relationships with operating returns and Tier 1 capital.

Risk-Taking Behavior in the U.S. Thrift Industry

Risk-Taking Behavior in the U.S. Thrift Industry
Author: John D. Knopf
Publisher:
Total Pages: 33
Release: 2008
Genre:
ISBN:

This paper is concerned with the relationship between ownership structure and risk taking in the U.S. thrift industry along with the impact of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) on this relationship. Our results, based on balance sheet and market measures of risk, suggest that insider controlled thrifts were more likely to engage in risk taking behavior prior to 1989 than were diversely held institutions. FIRREA seems to have curtailed much of the risk taking behavior of these institutions; in fact, some evidence suggests that insider controlled thrifts may have actually engaged in less risk taking behavior than their diversely held counterparts after 1989. We find inverse relationships between risk-taking behavior and levels of institutional shareholdings during all periods. This finding, along with the finding that increased risk-taking does not increase returns to thrift shareholders, suggests that the motive for risk-taking behavior on the part of insider held thrifts may not have been the maximization of the acirc;not;Soptionacirc;not;? value associated with shares as reported elsewhere. We do find evidence that entrenched managers may have generated significant private benefits for themselves.

Risk Taking Behavior in the Us Thrift Industry

Risk Taking Behavior in the Us Thrift Industry
Author: John D. Knopf
Publisher:
Total Pages:
Release: 1998
Genre:
ISBN:

The paper is concerned with the relationship between ownership structure and risk-taking in the US thrift industry along with the impact of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) on this relationship. Our results, based on balance sheet and market measures of risk, suggest that insider controlled thrifts were more likely to engage in risk-taking behavior prior to 1989 than were diversely held institutions. FIRREA seems to have curtailed much of the risk-taking behavior of these institutions; in fact, some evidence suggests that inside controlled thrifts may have actually engaged in less risk-taking behavior than their diversely held counterparts after 1989. We find inverse relationships between risk- taking behavior and levels of institutional shareholdings during all periods. This finding, along with the finding that increased risk-taking does not increase returns to thrift shareholders, suggests that the motive for risk- taking behavior on the part of insider held thrifts may not have been the maximization of the quot;optionquot; value associated with shares as reported elsewhere.

Impact of Digitalization on Reporting, Tax Avoidance, Accounting, and Green Finance

Impact of Digitalization on Reporting, Tax Avoidance, Accounting, and Green Finance
Author: Alqatan, Ahmad
Publisher: IGI Global
Total Pages: 376
Release: 2024-04-01
Genre: Business & Economics
ISBN:

Digital era reporting undergoes a seismic shift as automation takes center stage. The transition from manual reporting to real-time automated systems enhances precision and efficiency and reduces errors, empowering decision-makers. However, this era of digital reporting brings forth a new set of challenges, from data security and privacy concerns to the imperative need for robust cybersecurity measures. Impact of Digitalization on Reporting, Tax Avoidance, Accounting, and Green Finance delves into this transformative wave, comprehensively exploring its consequences on these critical domains. The book meticulously dissects both the positive and negative repercussions, encapsulating the challenges and opportunities that arise in this era of digital metamorphosis. Navigating tax avoidance in a digitalized world unveils a complex dynamic. Digitalization, on the one hand, empowers tax authorities to access and analyze vast datasets, making it challenging for businesses to engage in tax evasion. On the other hand, sophisticated digital tools provide fertile ground for corporations to devise intricate tax avoidance schemes. Striking a balance becomes paramount, necessitating regulatory measures and international cooperation while addressing ethical dimensions in leveraging technology for tax strategies. The book offers a nuanced understanding of the intricate relationship between digitalization and these critical domains, from business professionals and financial analysts to regulatory bodies and sustainability advocates.

Global Financial Stability Report, October 2014

Global Financial Stability Report, October 2014
Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
Total Pages: 192
Release: 2014-10-08
Genre: Business & Economics
ISBN: 1484358333

The October 2014 issue finds that six years after the start of the crisis, the global economic recovery continues to rely heavily on accommodative monetary policies in advanced economies. Monetary accommodation remains critical in supporting economies by encouraging economic risk taking in the form of increased real spending by households and greater willingness to invest and hire by businesses. However, prolonged monetary ease may also encourage excessive financial risk taking. Analytical chapters examine (1) the growth of shadow banking around the globe, assessing risks and discussing regulatory responses, and calling for a more encompassing (macroprudential) approach to regulation and for enhanced data provision; and (2) how conflicts of interest among bank managers, shareholders, and debt holders can lead to excessive bank risk taking from society’s point of view, finding no clear relation between bank risk and the level of executive compensation, but that a better alignment of bankers’ pay with long-term outcomes is associated with less risk.

The Causes and Costs of Depository Institution Failures

The Causes and Costs of Depository Institution Failures
Author: Allin F. Cottrell
Publisher: Springer Science & Business Media
Total Pages: 251
Release: 2012-12-06
Genre: Business & Economics
ISBN: 9401106630

One of the major financial market events of the 1980s was the precipitous rise of depository institution failures including banks, savings and loan associations, and credit unions. Not since the 1930s has there been a similar period of turmoil in these industries. The events of the 1980s have inspired a renewed interest in the causes and cost of financial institution failure and several questions that had seldom been asked in the post-World War II economics literature have resurfaced Why do financial institutions fail? What are the costs of their failure? How do they differ from other firms and industries? What are the implications for financial market regulation? The Causes and Costs of Depository Institution Failures critically surveys and extends previous analyses of these questions. Audience: Scholars and researchers in the areas of money and banking, financial institutions, and financial markets, as well as regulators and policymakers.

Managing Risk in Thrift Institutions

Managing Risk in Thrift Institutions
Author: Richard Roll
Publisher:
Total Pages: 44
Release: 1987
Genre: Portfolio management
ISBN:

Even if thrift institutions were exposed only to interest rate risk, gap management using simple duration would be an imperfect method, particularly for callable assets and liabilities. Duration measures interest rate risk for parallel shifts in the yield curve, but actual yield curve shifts should not be, and usually are not, parallel. An alternative to duration is a multi-factor model such as the Arbitrage Pricing Model (APT). An empirical investigation of a sample of large thrifts disclosed that they are exposed to APT factors such as inflation, investor confidence, and the term structure. The level of thrift exposure to these risk factors is twice that of the average industrial company and thrifts also exhibit an unusually large amount of non-systematic risk.