Equity Returns to Small Bank Investors

James P. Bedingfield, Robert D. Johnston and A. J. Stagliano
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James P. Bedingfield: University of Maryland
Robert D. Johnston: George Mason University
A. J. Stagliano: St Joseph's University

Journal of Entrepreneurial Finance, 1992, vol. 1, issue 3, 289-296

Abstract: Unlike most other small firms, there is an excellent record of the initial equity capitalization details of banking organizations when they are formed, as well as subsequent changes, because of the chartering application and reporting requirements of the banking regulatory authorities. By combining these records with the actual approved acquisition price of small banks, the return received by small bank investors from the time of organization through acquisition is determined. For small banks organized after 1972 and acquired from 1980 and through 1988, yearly mean rates of return ranged from 23.07 percent to 10.49 percent. Generally, these returns exceed S&P 500 returns for similar holding periods, but on a Sharpe Performance Index risk adjusted basis were inferior to S&P portfolios in six of nine holding periods and consistently weaker by the same measure to small company investment on the NYSE for this entire period. This inferior risk adjusted performance was unexpected.

Keywords: Small Bank; Investment Returns (search for similar items in EconPapers)
JEL-codes: G12 G21 G32 L25 (search for similar items in EconPapers)
Date: 1992
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