The relationship between revenue diversification and bank performance

A B S T R A C T
This paper contributes to the existing literature by investigating the impact of revenue diversification on bank performance through a broad array of financial reforms, including credit controls, interest rate controls, entry barriers, banking supervision, privatization, and financial account restrictions. This analysis is the first to investigate whether financial structures (bank- or market-based systems) change the effect of diversification on individual bank performance. We use a panel dataset sample from 29 Asia- Pacific countries covering the period between 1995 and 2009, for a total of 2372 banks. Unlike the results of previous studies based on data from the U.S. and Europe, this study confirms the hypothesis of the portfolio diversification effect for the Asia-Pacific banking industry. For bank-based groups, bank performance can be improved through diversification, supporting the ‘‘bank-based view’’ hypothesis. 

Corporate governance and investment-cash flow sensitivity: Evidence from emerging markets

Abstract 

Controlling for country-level governance, we investigate how firms' corporate governance influences financing constraints. Using firm-level corporate governance rankings across 14 emerging markets, we find that better corporate governance lowers the dependence of emerging market firms on internally generated cash flows, and reduces financing constraints that would otherwise distort efficient allocation of investment and destroy firm value. Additionally and more importantly, firm-level corporate governancematters more significantly in countries with weaker country-level governance. This suggests substitutability between firm-specific and country-level governance in determining a firm's investment sensitivity to internal cash flows.

Herding behaviour and sentiment: Evidence in a small European market 

Abstract

This work studies herding behaviour in a small European market, by analysing the stocks that constitutedthe Portuguese stock PSI-20 index, for the period between 2003 and 2011. The two different approachesused to measure herding intensity led to different results, suggesting that measurements of the herdingphenomenon are sensitive to the method used. Consequently, there is a need for further research into themethodology used to test this phenomenon. Additionally, the study analyses the relationship betweenherd behaviour and investor sentiment, an area that has been little explored. In applying causality teststo the impact of sentiment on herd behaviour, only weak evidence is found that sentiment influencesherding.

Governance, product market competition and cash management in IPO firms

Abstract
This study evaluates the link between CEO governance heterogeneity, power structure of the firm, and product market competition on various facets of post-IPO cash policy. Our results suggest that post-IPO cash holdings as well as marginal value of cash reserves are higher under a founder CEO governance regime relative to non-founder CEOs. Concentrating board power in the hands of founder CEOs however, reduces their ability to maintain higher post-IPO cash reserves. Our results also suggest that product market competition influences both the level and marginal value of cash reserves in the hands of founder CEOs. Further, we find that stronger internal governance reduces the tendency of IPO firms to deploy excess cash reserves to fund internal investments in excess of industry rivals. Finally, our results suggest that excess cash reserves in competitive industry environments lead to superior post-IPO operating performance.