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Korean Journal of Financial Studies 2015;44(5):829-854.
Published online December 31, 2015.
A Study on the Effects of Controlling Shareholders` Ownership on the Risk-Taking Behaviors of Savings Banks in Korea
Kyung Suh Park, Chan Shik Jung
지배주주 지분율이 저축은행의 고위험 추구 행태에 미치는 영향에 관한 연구
박경서, 정찬식
Abstract
This study empirically investigates the relationship between controlling shareholders’ ownership and the risk-taking behaviors of savings banks in Korea. According to Agrawal and Mandelker (1987), the large stock holdings of managers tend to induce them to select variance-increasing corporate investments, but such a risk-taking incentive of managers may decrease the value of their human capital by reducing the certainty equivalent of the stream of their employment income. Thus, managers’ incentive with respect to the level of a firm’s risk has remained an empirical issue. We extend Agrawal and Mandelker (1987) to investigate whether savings banks’ risk increases or decreases with the level of controlling shareholders’ ownership. We find that the risk of savings banks increases with higher ownership of controlling shareholders in various dimensions. First, z-score, the level of risk-aversion of a bank, decreases with the higher ownership of controlling shareholders. Second, debt-to-asset ratio, decreases with the higher ownership of controlling shareholders. Third, the PF-loan ratio, measured by project finance related loan amounts divided by total assets, increases with the higher ownership of controlling shareholders. Fourth, the variance of ROA and the variances of the cost of capital of both the equity and the debt increases with the higher ownership of controlling shareholders. In summary, the risk-taking behaviors of savings banks are strengthened with controlling shareholders’ ownership. These findings have a policy implication that government authorities should more intensively monitor the savings banks with the higher ownership of controlling shareholders.
Key Words: 고위험,위험추구,이해일치 가설,저축은행,지배주주,Controlling Shareholders,High Risk-High Return,Interest Alignment Hypothesis,Risk-Taking,Savings Banks


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