The role of banks in the governance of nonfinancial firms: Evidence from Europe |
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| Institution: | 1. University of Sousse, Sousse 4054, Tunisia;2. IPAG Business School, Paris 75006, France;3. University of Manouba, Manouba 2010, Tunisia;1. Administration Program, Pontifical Catholic University of Parana, 1155, Imaculada Conceição St., Curitiba, PR, 80215-901, Brazil;2. Desautels Faculty of Management, McGill University, 1001 Sherbrooke St. W, Montreal, QC, H3A 1G5, Canada;1. Department of Accounting and Finance, Technological Educational Institute of Peloponnese, Kalamata, Greece;2. Department of Banking and Financial Management, University of Piraeus, Greece;1. Monfort College of Business, University of Northern Colorado, Campus Box 128, Greeley, CO 80639, USA;2. School of Business, Stockton University, 101 Vera King Farris Drive, Galloway, NJ 08205, USA;1. University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group, Richmond Building, Portland Street, PO1 3DE, United Kingdom;2. Al Yamamah University, 7010 King Fahd Road, Al Qirawan, Riyadh 13541, Saudi Arabia |
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| Abstract: | The aim of our research is to investigate the important role of banks in the governance of companies listed in the Euronext 100 index. Primarily, this research seeks to examine the impact of a bank’s presence within a firm, as a creditor or shareholder, on firm performance, as well as the motivations of banks to acquire holdings, and whether the presence of a bank as a shareholder of a firm facilitates its access to bank loans. Empirical analyses are conducted with a sample of 86 nonfinancial institutions listed in the Euronext 100 index over the period 2008–2013 using the three-stage least squares method. The study shows, first, that the presence of a bank within a firm, as a creditor or shareholder, is positively related to firm performance. Moreover, the firm’s performance is an important determinant of the presence of bank shareholding. Finally, the presence of a bank as a shareholder of a firm does not facilitate its access to bank loans. |
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| Keywords: | Corporate governance Bank debt Bank ownership Performance Euronext 100 Simultaneous equation model |
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