Are the Largest Banks Valued More Highly?

Bernadette A. Minton, René Stulz and Alvaro G. Taboada
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Bernadette A. Minton: OH State U
Alvaro G. Taboada: MS State U

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: Some argue too-big-to-fail (TBTF) status increases the value of the largest banks. In contrast, we find that the value of the largest banks is negatively related to asset size in normal times, but not during the financial crisis when TBTF status was most valuable. Further, shareholders lose when large banks cross a TBTF threshold through acquisitions. The negative relation between bank value and bank size for the largest banks cannot be explained by differences in ROA, ROE, equity volatility, tail risk, distress risk, or equity discount rates, but it can be partly explained by the market*s discounting of trading activities.

JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-ban
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http://www.ssrn.com/abstract=3213623

Related works:
Journal Article: Are the Largest Banks Valued More Highly? (2019)
Working Paper: Are Larger Banks Valued More Highly? (2017)
Working Paper: Are Larger Banks Valued More Highly? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:ohidic:2018-12

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