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Firm Performance, Financial Institutions and Corporate Governance in the Netherlands

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Author Info
Chirinko, Bob
Ees, Hans van
Garretsen, Harry
Sterken, Elmer

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Abstract

This paper analyses the impact of share ownership, creditorship and networking by financial institutions on the performance of 94 Dutch non-financial firms in the period 1992-1996. We find a nonlinear relationship between firm performance and ownership by banks. Because of vari o us defense mechanisms the role of the shareholder is very limited in the Netherlands. Financial institutions are, however, in a position to discipline firm management through other channels. It turns out that there is a direct positive link between share o wnership by banks and the firms` short-term bank loans, which indicates the existence of a financing channel. Financial institutions are also represented on the supervisory boards of firms and vice versa, which is an example of networking. This suggests t h at besides creditorship networking may be an additional disciplinary device for financial institutions. Here we find that there is a significant positive relationship between share ownership by insurance companies and pension funds and the probability of networking.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 210.

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Date of creation: 1999
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Handle: RePEc:ces:ceswps:_210

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Find related papers by JEL classification:
G20 - Financial Economics - - Financial Institutions and Services - - - General
G30 - Financial Economics - - Corporate Finance and Governance - - - General

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  9. Becht, Marco, 1999. "European corporate governance: Trading off liquidity against control," European Economic Review, Elsevier, vol. 43(4-6), pages 1071-1083, April. [Downloadable!] (restricted)
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