Manager wealth concentration, CEO Compensations, Corporate Governance, and Bank Risk-Taking: Conglomerate versus Non-- Conglomerate Bank in Taiwan

• Main Authors: Yeh-hua Chen, 陳燕華
• Other Authors: Sheng-hung Chen
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/13908818752581239101

碩士 === 南華大學 === 財務金融學系財務管理碩士班 === 100 === 　　Using quarterly data on commercial and specialized banks in Taiwan over 1990 to 2010 from Taiwan Economic Journal (TEJ) database, this thesis conducts empirical analysis on the comparison between conglomerated and non-conglomerated banks using Peterson’s (2009) approach taking the fixed effect of bank and time into account to amend the standard deviation for simultaneous estimation. This thesis aims to investigate how manager’s wealth concentration, CEO compensations, and corporate governance affect bank’s risk-taking behavior using comprehensive risk measures from perspectives of accounting and market information. 　 　　As for conglomerated banks, empirical results show that higher manager wealth concentration would reduce the risks of banks, but managers with higher family ownership would increase bank risk. Regarding bank corporate governance, the larger board size is, the lower bank’s nonperforming loan (NPL) and loan loss reserve ratio are. We also find that the higher the ratio of senior managers over total board members are, the lower loan loss reserve ratio is. While the difference in the seats surplus to deviation is larger, however this reduces bank’s risk taking (the standard deviation of ROE and ROA). In addition, higher institutional ownership and the overall holdings by top 10 shareholders would enhance bank risks, while higher CEO compensations could mitigate the incentive for bank risk-taking. 　 　　Furthermore, based on the results of bank’s market risk measures, manager wealth concentration in conglomerated banks would substantially reduce bank’s earnings risk, but inversely increase the risk of industrial systematic earnings. Managers with higher family ownership would increase the risk of the bank’s earnings risk while larger board size would increase bank’s interest rate risk. It is found that the higher the ratio of independent directors and supervisors would reduce bank’s earnings risk. Higher institutional ownership and the top 10 shareholders holdings would mitigate bank risk. It is worth noting when higher managers pay could reduce the bank’s systemic and market risk, but otherwise enhance individual earnings risk and idiosyncratic risk, implicating that bank managerial compensations are highly sensitive to bank market risk.