Directorship, collateralized shares, risk, and performance of Taiwan banking industry

Yi Kai Chen, Lanfeng Kao, Alan T. Wang, Ming Hsuan Hsieh

Research output: Contribution to journalConference article

Abstract

In recent years, considerable concerns have arisen over the issue of corporate governance in banks' supervision. One of the major issues has been investigated whether the sound mechanism of corporate governance benefits bank risk management and performance. The collateralized shares, serving stocks as collaterals, are one of financial leverage approaches and it is likely to be an incentive for block shareholders to misapply assets due to the deviation between the controlship and the ownership. The objective of this study is to examine whether the attitude of the board of directors toward risk will affect the bank risk and performance. Quarterly data of commercial banks listed either on the Taiwan Stock Exchange or GreTai Securities Market from 1999 to 2007 are examined in this study. The results show that the collateralized shares may have contributed to a lower return due to a higher risk and they are in line with previous studies our results are in line with previous researches. In conclusion, the monitoring mechanism should enforce relatively regulations more strictly to avoid the agency problems. Especially to the insiders of influence such as board of directors or block shareholders, more strictly regulations and the disclosure of relatively information should be necessary. The result will be expected to lead to better understanding of the nature of the collateralized shares and laying the groundwork for realizing that is the collateralized shares worth monitoring. It may provide policy implication for the regulators in the later monitoring requirement.

Original languageEnglish
Pages (from-to)57-71
Number of pages15
JournalCorporate Ownership and Control
Volume6
Issue number1 SPEC. ISS.
Publication statusPublished - 2008 Jan 1
EventInternational Conference on Corporate Governance and Financial Integration - Taipei, Taiwan
Duration: 2008 May 162008 May 16

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All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)

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