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| Author: | Bliss, R.R. Flannery, M.J. |
| Title: | Market discipline in the governance of U.S. bank holding companies: monitoring vs. influencing |
| Journal: | European Finance Review
2002 : VOL. 6:3, p. 361-395 |
| Index terms: | Bank holding companies USA |
| Freeterms: | Market discipline |
| Language: | eng |
| Abstract: | Market discipline is an article of faith among financial economists, and the use of market discipline as a regulatory tool is gaining credibility. Effective market discipline involves two distinct components: security holders' ability to accurately assess the condition of a company (monitoring) and their ability to cause subsequent managerial actions to reflect those assessments (influence). Substantial evidence supports the existence of market monitoring. However, the existing evidence about market influence involves relatively rare events such as management turnover. This paper seeks evidence that U.S. bank holding companies' security price changes reliably influence subsequent managerial actions. |
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