Institutional Ownership, Diversification, and Riskiness of Bank Holding Companies. Issue 3 (4th July 2013)

• Record Type: Journal Article
• Authors: Deng, Saiying; Elyasiani, Elyas; Jia, Jingyi
• Is Part Of: Financial review. Volume 48:Issue 3(2013)
• Page Start: 385
• Page End: 415
• Publication Date: 2013-07-04
• Subjects: Finance -- United States -- Periodicals; Finance -- Periodicals; 332
• DOI: 10.1111/fire.12008
• Languages: English
• ISSNs: 0732-8516

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>We examine the relationship among the level and stability of institutional ownership, diversification, and riskiness of publicly traded bank holding companies. We find that large and stable institutional ownership is associated with a higher (lower) level of geographic, revenue, and nontraditional banking (asset) diversification and lower risk, suggesting that institutional investors are prudent and favor risk‐reducing diversification strategies. The association between institutional ownership level and diversification is more pronounced under deregulation and during the crisis, suggesting a substitution effect between regulation and market discipline, and a greater level of monitoring and/or advising by institutional investors during the crisis, respectively.</p> </abstract>