The Voting Premium in the Banking Industry: A Cross-Country Analysis

38 Pages Posted: 31 Mar 2011

See all articles by Gianfranco Gianfrate

Gianfranco Gianfrate

EDHEC Business School

Laura Zanetti

Bocconi University - Department of Finance

Date Written: June 1, 2010

Abstract

Is the governance of banks different from other corporations? Which regulation and public policies enhance the governance of banks? We address these questions investigating the existence and magnitude of private benefits of control in banks around the world. We construct a new database covering 157 control-transfer transactions across 40 countries. We are able to detect the existence of an average 3.3% (as percentage of equity) block transaction premium. Given this estimation of private benefits of control, we examine their legal and regulatory determinants. We find evidence that bank regulations and supervisory practices have impact on the expropriation of minority shareholders. In particular, the regulation on entry plays a role in curbing private benefits of control in the banking industry. These results are consistent with the views that expropriation of minority shareholders is important internationally, and that regulation can restrain this expropriation.

Keywords: corporate governance, private benefits of control, transaction premium, law and finance, banks, regulation

JEL Classification: G21, G28, G32, G34

Suggested Citation

Gianfrate, Gianfranco and Zanetti, Laura, The Voting Premium in the Banking Industry: A Cross-Country Analysis (June 1, 2010). CAREFIN Research Paper No. 10/2010, Available at SSRN: https://ssrn.com/abstract=1798634

Gianfranco Gianfrate (Contact Author)

EDHEC Business School ( email )

58 rue du Port
Lille, 59046
France

Laura Zanetti

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

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