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http://ssrn.com/abstract=2170392
 
 

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Shareholder Empowerment and Bank Bailouts


Daniel Ferreira


London School of Economics & Political Science (LSE) - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

David Kershaw


London School of Economics - Law Department

Tom Kirchmaier


University of Manchester - Manchester Business School; London School of Economics & Political Science (LSE) - Financial Markets Group (FMG)

Edmund‐Philipp Schuster


London School of Economics - Law Department

November 2, 2012

ECGI - Finance Working Paper No. 345/2013
Asian Finance Association (AsFA) 2013 Conference

Abstract:     
We propose a management insulation index based on banks’ charter and by-law provisions and on the provisions of the applicable state corporate law that make it difficult for shareholders to oust a bank’s management. We show that banks in which managers were more insulated from shareholders in 2003 were roughly 18 to 26 percentage points less likely to be bailed out in 2008/09. We also find that banks in which the management insulation index was reduced between 2003 and 2006 were more likely to be bailed out. We discuss alternative interpretations of the evidence. The evidence is mostly consistent with the hypothesis that banks in which shareholders were more empowered performed poorly during the crisis.

Number of Pages in PDF File: 49

Keywords: Corporate Governance, Bank Bailouts

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Date posted: November 3, 2012 ; Last revised: May 6, 2013

Suggested Citation

Ferreira, Daniel and Kershaw, David and Kirchmaier, Tom and Schuster, Edmund‐Philipp, Shareholder Empowerment and Bank Bailouts (November 2, 2012). ECGI - Finance Working Paper No. 345/2013; Asian Finance Association (AsFA) 2013 Conference. Available at SSRN: http://ssrn.com/abstract=2170392 or http://dx.doi.org/10.2139/ssrn.2170392

Contact Information

Daniel Ferreira (Contact Author)
London School of Economics & Political Science (LSE) - Department of Finance ( email )
Houghton Street
London, WC2A 2AE
United Kingdom
(+44) 20 7955 7544 (Phone)
HOME PAGE: http://personal.lse.ac.uk/FERREIRD/
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
David Kershaw
London School of Economics - Law Department ( email )
Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

Tom Kirchmaier
University of Manchester - Manchester Business School ( email )
Booth Street West
Manchester, M15 6PB
United Kingdom
+44 161 275 7781 (Phone)
London School of Economics & Political Science (LSE) - Financial Markets Group (FMG) ( email )
Houghton Street
London WC2A 2AE
United Kingdom
+44 207 852 3588 (Phone)
HOME PAGE: http://fmg.lse.ac.uk
Edmund-Philipp Schuster
London School of Economics - Law Department ( email )
Houghton Street
London, WC2A 2AE
United Kingdom

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References:  40
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