حکومت و ارزش گذاری بانکی

This paper assesses the impact of the ownership structure of banks and shareholder protection laws on bank valuations while controlling for differences in bank regulations. Except in a few countries with very strong shareholder protection laws, banks are not widely held. Rather, families or the State control banks. Furthermore, (i) larger cash-flow rights by the controlling owner boost valuations, (ii) stronger shareholder protection laws increase valuations, and (iii) greater cash-flow rights mitigate the adverse effects of weak shareholder protection laws on valuations. These results suggest that ownership structure is an important mechanism for governing banks.

Research suggests that well-functioning banks promote growth.1 When banks efficiently mobilize and allocate funds, this lowers the cost of capital to firms and accelerates capital accumulation and productivity growth. Furthermore, banks, as major creditors and in some countries as major equity holders, play an important role in governing firms. Thus, if bank managers face sound governance mechanisms, this enhances the likelihood that banks will raise capital inexpensively, allocate society's savings efficiently, and exert sound governance over the firms they fund. Nevertheless, little is known about which laws and regulations enhance the governance of banks. One standard rationale for heavy government regulation of banks is that shareholders and creditors lack sufficient mechanisms for exerting sound governance over extraordinarily complex, opaque banks, especially in the presence of deposit insurance. But, as Fama (1985) famously asked, are banks different? Or, do the same corporate control mechanisms that work in non-financial corporations also work in banks? Research indicates that strong shareholder protection laws enhance the governance of non-financial corporations (La Porta et al., 2002), but there exists no evidence on shareholder protection laws and the governance of banks. This paper assesses the impact of shareholder protection laws and ownership structure on bank valuations while controlling for international differences in bank regulations. By examining valuations, we directly analyze banks' cost of capital and indirectly assess the market's assessment of the governance of banks. That is, holding other things constant, we assess whether governance mechanisms that both reduce the ability of insiders to expropriate bank resources and promote bank efficiency tend to boost the market value of banks. Research suggests that strong shareholder protection laws increase firm valuations (Claessens et al., 2000 and La Porta et al., 2002). In short, investors pay more for equity when legal institutions effectively protect their rights. From this perspective, investor protection laws may provide the tools for small shareholders to stop large shareholders from expropriating bank resources. We define expropriation broadly to include theft, transfer pricing, asset stripping, the preferential hiring of family members, the allocation of credit in a manner that enriches bank insiders but hurts the bank, and other “perquisites” that benefit bank insiders but hurt the bank. In the particular case of banks, however, not everyone agrees that shareholder protection laws will effectively thwart expropriation. Many argue that banks are extraordinarily complex and opaque (Morgan, 2002). From this perspective, investor protection laws alone may not provide a sufficiently powerful corporate governance mechanism to small shareholders. Put differently, even with strong investor protection laws, small stakeholders may lack the means to monitor and govern complex banks. Furthermore, bank regulations may be sufficiently pervasive that they render shareholder protection laws superfluous, or bank regulations may supersede standard investor protection laws. Thus, the impact of investor protection laws on banks may differ from their impact on non-bank corporations. We provide the first examination of the impact of shareholder protection laws on bank valuations under different bank regulatory regimes. Official bank regulations may arise in part to stop bank insiders from expropriating or misallocating bank resources as argued in Caprio and Levine (2002). Thus, effective regulation may increase investor confidence regarding expropriation and boost market valuations. Of course, bank regulations arise for reasons other than reducing expropriation. Especially in the presence of deposit insurance, regulation may arise to reduce excessive risk-taking by bank owners and protect depositors. In this context, regulation could actually reduce bank valuations by forcing bank risk below what equity holders would choose in the presence of government insurance. We test for these effects. Nevertheless, this discussion highlights a key limitation of our analysis. Unlike Barth et al. (2006), we do not provide an assessment of bank regulation that involves assessing the impact of regulations on bank efficiency, credit allocation, fragility, and corruption. Rather, we provide a much narrower assessment of the relationships among the market's valuation of banks, shareholder protection laws, official bank regulations, and the ownership structure of banks. To draw precise inferences regarding the impact of shareholder protection laws and bank regulations on bank valuations, we simultaneously study the ownership structure of banks. Ownership structure is an additional, and perhaps interrelated, mechanism for exerting corporate control. A crucial agency problem is the ability of controlling owners to expropriate—often legally—corporate resources as first modeled by Jensen and Meckling (1976). The incentives of the controlling shareholders to expropriate resources from the corporation, however, depend on their cash-flow rights. As their cash-flow rights rise, expropriation involves a greater reduction in their own cash flow. Since expropriation is costly, increases in the cash-flow rights of the controlling owner will reduce incentives to expropriate resources from the corporation, holding other factors constant (Burkart et al., 1997). Besides the direct impact of concentrated ownership on bank values, concentration may also influence the impact of legal protection on bank valuations.2 The model by Shleifer and Wolfenzon (2002) predicts that a marginal improvement in legal protection may have less of an impact on bank valuations when there is a controlling shareholder. Or, put differently, it predicts that with effective legal protection of minority shareholders, having a controlling shareholder is less important for stemming the expropriation of the minority shareholders' wealth. La Porta et al. (2002) provide evidence consistent with this prediction. One contribution of this paper is to assemble and analyze detailed data on the ownership of banks around the world. Are banks widely held, or do they tend to have controlling owners? If they have a controlling owner, who tends to control banks? La Porta et al. (1999) show that the widely held corporation is the exception rather than the norm internationally. Rather, they show that families or the State typically control firms. While there are financial institutions in La Porta et al.'s (1999) sample, they do not focus on detailing the ownership structure of banks in each country and their coverage of commercial banks is limited. Similarly, while Barth et al., 2001 and Barth et al., 2004 provides cross-country statistics on the degree of state ownership of the banking industry, they do not provide detailed information on the ownership structure of banks. In this paper, we construct a new database covering 244 banks across 44 countries and trace the ownership of banks to identify the ultimate owners of bank capital and the degree of voting rights and cash-flow rights concentration. As defined in greater detail below, an owner's voting rights will exceed the owner's cash-flow rights when the owner controls votes through various affiliated parties without having the rights to all cash flows received by those affiliated parties. We provide information on three questions concerning ownership. First, are banks widely held or do they have a controlling owner with significant control and cash-flow rights? We find that banks are generally not widely held. In our average country, only about 25 percent of the banks are widely held, i.e., they do not have a shareholder that owns at least 10 percent of the voting rights. Second, who owns banks? For banks with a controlling shareholder, we find that the controlling owner is a family more than half of the time in the average country, while we identify the State as the controlling owner of banks 19 percent of the time. Finally, are laws regarding the protection of minority shareholders associated with the degree of control rights and cash-flow rights concentration? The data indicate that stronger legal protection of shareholders is positively connected with countries having more widely held banks. Given this information on bank ownership, we examine the legal determinants of bank valuations. Specifically, using bank-level data, we evaluate the impact of the legal protection of minority shareholders, bank regulatory policies, and ownership structure on bank valuations. To measure valuation, we use both Tobin's Q and the ratio of the market value of equity to the book value of equity. We also test whether ownership concentration affects the impact of laws on bank valuations. There are four key results on the governance of banks. First, stronger legal protection of minority shareholders is associated with more highly valued banks. This suggests both that expropriation of minority shareholders is important in many countries and that legal mechanisms can restrict expropriation of bank resources. Second, after controlling for the cash-flow rights of the controlling owner, bank regulations do not have an independent association with bank valuations. Specifically, empowering the public sector through strong supervisory agencies does not influence bank valuations, nor is official supervisory power associated with the ownership structure of banks. Similarly, regulatory restrictions on bank capital, the entry of new banks, and bank activities in securities markets, insurance, and real estate do not have an independent association with bank valuations. Also, even when we dissect the different channels through which regulation may influence the governance of banks, we find no evidence that regulation has an impact on bank valuations—neither a positive impact by reducing expropriation nor a negative impact by reducing bank risk below the level desired by shareholders. Third, the degree of cash-flow rights of the largest owner enters the bank valuation equation positively. The evidence is consistent with theoretical predictions that concentrated ownership reduces incentives for insiders to expropriate bank resources, and that this boosts valuations. Fourth, large cash-flow rights reduce the impact of legal protection on valuations. Thus, a marginal improvement in legal protection has less of an impact on a bank's valuation as the controlling owner's cash-flow rights increases. Put differently, a marginal increase in ownership concentration has a particularly large impact on valuations when legal protection of minority shareholders is weak. These last two findings shed a skeptical light on regulatory strategies that seek to minimize ownership concentration if these strategies also reduce the controlling owner's cash-flow rights, especially in environments with weak legal protection of minority shareholders. Moreover, taken together, these results indicate that bank valuations respond to shareholder protection laws and ownership structure in ways that are very consistent with how non-financial firms respond. Section 2 discusses the data. Section 3 analyzes bank ownership around the world. Section 4 examines bank valuations. Section 5 provides extensions and robustness tests and Section 6 concludes.

This paper first constructed new data on the ownership of 244 banks in 44 countries and then (1) documented the ownership structure of banks around the world and (2) assessed different theories about the relationships among ownership structure, shareholder protection laws, and bank valuations. On ownership, we find that except in a few countries with very strong shareholder protection laws, banks are not widely held. Indeed, 21 out of the 44 countries in our sample do not have a widely held bank among the ten largest banks. Rather, banks tend to be controlled by a family or the State. On valuations, we find that (i) larger cash-flow rights by the controlling owner boosts valu- ations, (ii) weak shareholder protection laws lower bank valuations, and (iii) greater cash-flow rights mitigate the adverse effects of weak shareholder protection laws on bank valuations. These results are consistent with the views that expropriation of minority shareholders in banks is important internationally, that laws can play a role in restraining this expropriation, and that con- centrated cash-flow rights also represents an important mechanism for governing banks. These results are robust to an array of robustness checks, including controls for numerous country- specific and bank-specific characteristics, the use of different definitions for ownership control and bank valuations, and re-estimation using different samples of countries and banks. Fur- thermore, we do not find robust evidence that the stringency of capital requirements or official supervisory power influences bank valuations, nor do we find that regulatory restrictions on bank activities affect the market’s valuation of banks. Finally, when we scrutinize the different chan- nels through which regulation may affect the governance of banks, we find no evidence that regulation has an impact on bank valuations—neither a positive effect by reducing expropriation nor a negative effect by reducing bank risk below the level desired by shareholders. Thus, the results indicate that the same core corporate control mechanisms that influence the governance of non-financial firms also influence bank operations