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

Yiwei Fang (), Iftekhar Hasan (), Woon Sau Leung () and Qingwei Wang
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Yiwei Fang: Illinois Institute of Technology
Woon Sau Leung: University of Edinburgh Business School

Journal of International Business Studies, 2019, vol. 50, issue 9, No 7, 1566-1593

Abstract: 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.

Keywords: multiple regression analysis; agency theory; internationalization theories and foreign market entry; international financial integration; foreign bank ownership; stock price synchronicity (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1057/s41267-019-00240-w

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