Disclosure, Ownership Structure and Bank Risk: Evidence from Asia
50 Pages Posted: 14 Feb 2014 Last revised: 19 Dec 2014
Date Written: October 23, 2014
We investigate the impact of the interaction of disclosure and ownership structure on bank risk. Using a sample of 209 commercial banks from Asia during the 2004-2010 period, we find that disclosure is negatively associated with income volatility and that such an impact is stronger in the presence of block holders and institutional ownership and weaker with insider or government ownership. Our results also provide evidence that better disclosure ensures greater stability as measured by individual bank default risk. Furthermore, a deeper investigation shows that disclosure on income statement, loans, other earning assets, deposits, and memo lines plays a stronger role in limiting risk than disclosure on non-deposit liabilities.
Keywords: bank risk, disclosure index, bank ownership
JEL Classification: G21, G28, G32
Suggested Citation: Suggested Citation