Foreign ownership, bank information environments, and the international mobility of corporate governance

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Title: Foreign ownership, bank information environments, and the international mobility of corporate governance
Author: Fan, Yiwei ; Hasan, Iftekhar ; Sau Leung, Woon ; Wang, Qingwei
Series: Journal of International Business Studies
Series volume: 50
Series number: 9 ; December
Year of publication: 2019
Publication date: 20.5.2019
DOI: https://doi.org/10.1057/s41267-019-00240-w
Page range: 1566-1593
Keywords: pankit; omistus; ulkomainen omistus; informaatio; osakkeet; tuotot; hinnat
Other keywords: multiple regression analysis; agency theory; internationalization theories and foreign market entry; international financial integration; foreign bank ownership; stock price synchronicity
Abstract: This paper investigates how foreign ownership shapes bank information environments. Using a sample of listed banks from 60 countries over 1997–2012, we show that foreign ownership is significantly associated with greater (lower) informativeness (synchronicity) in bank stock prices. We also find that stock returns of foreign-owned banks reflect more information about future earnings. In addition, the positive association between price informativeness and foreign ownership is stronger for foreign-owned banks in countries with stronger governance, stronger banking supervision, and lower monitoring costs. Overall, our evidence suggests that foreign ownership reduces bank opacity by exporting governance, yielding important implications for regulators and governments.


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