Institutional investor horizon and bank risk-taking

Shams Pathan, Mamiza Haq, Robert Faff and Trent Seymour

Journal of Corporate Finance, 2021, vol. 66, issue C

Abstract: We test the effect of short-term versus long-term institutional shareholding –so-called investor horizon– on bank risk-taking. We find that in contrast to banks dominated by short-term shareholders, banks with greater long-term shareholding are associated with lower risk, better stock performance, and conservative business and compensation policies. Our results imply that bank regulators should be more vigilant over the actions of banks that heavily rely on short-term shareholding.

Keywords: Bank risk-taking; Institutional shareholdings, financial crisis; Financial performance (search for similar items in EconPapers)
JEL-codes: G21 G32 G35 J33 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:66:y:2021:i:c:s0929119920302388

DOI: 10.1016/j.jcorpfin.2020.101794

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