Capital Market Frictions and Bank Lending in the EU

Altunbaş, Yener; Marques, David; Zhussupova, Balzhan

doi:10.1057/9780230590663_5

Frontiers of Banks in a Global Economy 2008

DOI: 10.1057/9780230590663_5

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Capital Market Frictions and Bank Lending in the EU

Yener Altunbaş

David Marques

Balzhan Zhussupova

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2024

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Cited by 1 publication

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CEO power and risk taking: evidence from European banks mergers and acquisitions

Sghaier,

Hamza

2024

JSMA

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PurposeThis study investigates the relationship between CEO power and the risk profile (RP) of acquiring banks through mergers and acquisitions (M&A) transactions.Design/methodology/approachThe analysis is based on 214 transactions between 2010 and 2022 involving European Union-based acquirers. To assess the impact of M&A on the acquiring bank’s RP, we compare changes in the acquirer’s RP to control banks. We use linear regression with two-stage least squares instrumental variables (2SLS-IV) to examine the effect of CEO power on changes in merger-related risk.FindingsThe findings suggest that CEO power reduces the RP of the acquiring bank. Specifically, CEOs who hold both the CEO and board chair positions tend to take fewer risks. Additionally, CEOs with high ownership, CEO pay and extensive experience (measured by tenure and acquisition experience) decrease the RP. However, prestige power is positively correlated with an increase in RPs.Practical implicationsThis research examines CEO influence on bank risk post-mergers, providing insights into governance, risk and strategic choices. The findings can guide banks in CEO selection and governance to mitigate M&A risks, improving risk management and decision-making in the financial sector.Originality/valueThis study is the first empirical investigation introducing diverse executive power metrics to analyze the link between executive power and risk-taking in the European banking sector, with a specific emphasis on the impact on M&A as critical investment choices.

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CEO power and risk taking: evidence from European banks mergers and acquisitions

Sghaier,

Hamza

2024

JSMA

View full text Add to dashboard Cite

show abstract

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Capital Market Frictions and Bank Lending in the EU

Cited by 1 publication

References 40 publications

CEO power and risk taking: evidence from European banks mergers and acquisitions

CEO power and risk taking: evidence from European banks mergers and acquisitions

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