EconPapers    
Economics at your fingertips  
 

Additional evidence on transparency and bank financial performance

Aigbe Akhigbe, James E. McNulty and Bradley A. Stevenson

Review of Financial Economics, 2017, vol. 32, issue C, 1-6

Abstract: Transparency expands the market for a firm's stock and lowers the cost of capital. Previous research measures bank transparency by analyst following and the standard deviation of analyst earnings per share forecasts and finds that transparency has a positive effect on bank financial performance. An earlier theoretical study in the market micro structure literature suggests that return volatility and trading volume are important measures of transparency. We examine the relation between transparency and bank holding company (BHC) profit efficiency using these four measures of transparency for 1996 through 2014. Our two stage least squares regression analysis indicates that transparency has a positive effect on bank financial performance. This is not a size effect as the result holds in each of three size categories. This is an important finding given that the recent financial crisis was characterized by a lack of transparency at a number of banking institutions.

Keywords: Profit efficiency; Transparency; Stochastic frontier analysis (search for similar items in EconPapers)
JEL-codes: G21 D02 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1058330016300982
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:revfin:v:32:y:2017:i:c:p:1-6

Access Statistics for this article

Review of Financial Economics is currently edited by T. K. Mukherjee and G. Whitney

More articles in Review of Financial Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2018-04-21
Handle: RePEc:eee:revfin:v:32:y:2017:i:c:p:1-6