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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27260
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| Title: | Risk-Taking Behavior in the U.S. Thrift Industry: Ownership Structure
and Regulatory Changes |
| Authors: | Knopf, John D.
Teall, John L. |
| Issue Date: | 14-Nov-1994 |
| Series/Report no.: | FIN-94-040 |
| Abstract: | This paper is concerned with the relationship between ownership
structure and risk taking in the U.S. thrift industry along with the
impact of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 (FIRREA) on this relationship. Our results, based on balance
sheet and market measures of risk, suggest that insider controlled
thrifts were more likely to engage in risk taking behavior prior to 1989
than were diversely held institutions. FIRREA seems to have curtailed
much of the risk taking behavior of these institutions; in fact, some
evidence suggests that insider controlled thrifts may have actually
engaged in less risk taking behavior than their diversely held
counterparts after 1989. We find inverse relationships between
risk-taking behavior and levels of institutional shareholdings during
all periods. This finding, along with the finding that increased
risk-taking does not increase returns to thrift shareholders, suggests
that the motive for risk-taking behavior on the part of insider held
thrifts may not have been the maximization of the “option”
value associated with shares as reported elsewhere. We do find evidence
that entrenched managers may have generated significant private benefits
for themselves. |
| URI: | http://hdl.handle.net/2451/27260 |
| Appears in Collections: | Finance Working Papers
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