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The effect of changes in ownership structure on performance: evidence from the thrift industry

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Author Info
Rebel A. Cole
Hamid Mehran

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Abstract

Restrictions on the ownership structure of a public company may harm the company's performance by preventing owners from choosing the best structure. We examine the stock-price performance and ownership structure, before and after the expiration of anti-takeover regulations, of a sample of thrift institutions that converted from mutual to stock ownership. We find that after the anti-takeover provisions expire, firm performance improves significantly, and the portions of the firm owned by managers, noninstitutional outside blockholders, and the firm's employee stock ownership plan increase. Changes in performance are positively associated with changes in ownership by managers and by noninstitutional outside blockholders but negatively associated with changes in ownership by employee stock ownership plans.

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 96-6.

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Date of creation: 1996
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Handle: RePEc:fip:fedgfe:96-6

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Keywords: Stocks ; Savings and loan associations;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Crawford, Anthony J & Ezzell, John R & Miles, James A, 1995. "Bank CEO Pay-Performance Relations and the Effects of Deregulation," Journal of Business, University of Chicago Press, vol. 68(2), pages 231-56, April. [Downloadable!] (restricted)
  2. Kane, Edward J., 1995. "Three paradigms for the role of capitalization requirements in insured financial institutions," Journal of Banking & Finance, Elsevier, vol. 19(3-4), pages 431-459, June. [Downloadable!] (restricted)
  3. Roe, Mark J., 1990. "Political and legal restraints on ownership and control of public companies," Journal of Financial Economics, Elsevier, vol. 27(1), pages 7-41, September. [Downloadable!] (restricted)
  4. Cornett, Marcia Millon & Tehranian, Hassan, 1992. "Changes in corporate performance associated with bank acquisitions," Journal of Financial Economics, Elsevier, vol. 31(2), pages 211-234, April. [Downloadable!] (restricted)
  5. Mehran, Hamid, 1992. "Executive Incentive Plans, Corporate Control, and Capital Structure," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(04), pages 539-560, December. [Downloadable!]
  6. Mester, Loretta J., 1991. "Agency costs among savings and loans," Journal of Financial Intermediation, Elsevier, vol. 1(3), pages 257-278, June. [Downloadable!] (restricted)
  7. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October. [Downloadable!] (restricted)
  8. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law & Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
  9. Rebel A. Cole & Hamid Mehran, 1991. "Executive compensation and corporate performance: evidence from thrift institutions," Proceedings, Federal Reserve Bank of Chicago, pages 227-247.
  10. Healy, Paul M. & Palepu, Krishna G. & Ruback, Richard S., 1992. "Does corporate performance improve after mergers?," Journal of Financial Economics, Elsevier, vol. 31(2), pages 135-175, April. [Downloadable!] (restricted)
  11. Benjamin E. Hermalin & Nancy E. Wallace, 1994. "The Determinants of Efficiency and Solvency in Savings and Loans," RAND Journal of Economics, The RAND Corporation, vol. 25(3), pages 361-381, Autumn. [Downloadable!] (restricted)
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  12. Jensen, Michael C. & Warner, Jerold B., 1988. "The distribution of power among corporate managers, shareholders, and directors," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 3-24, January. [Downloadable!] (restricted)
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  13. Demsetz, Harold, 1983. "The Structure of Ownership and the Theory of the Firm," Journal of Law & Economics, University of Chicago Press, vol. 26(2), pages 375-90, June.
  14. Harold Demsetz, 1993. "Financial regulation and the competitiveness of the large U.S. corporation," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 61-67. [Downloadable!]
  15. McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October. [Downloadable!] (restricted)
  16. Hubbard, R. Glenn & Palia, Darius, 1995. "Executive pay and performance Evidence from the U.S. banking industry," Journal of Financial Economics, Elsevier, vol. 39(1), pages 105-130, September. [Downloadable!] (restricted)
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  17. Mehran, Hamid, 1995. "Executive compensation structure, ownership, and firm performance," Journal of Financial Economics, Elsevier, vol. 38(2), pages 163-184, June. [Downloadable!] (restricted)
  18. De Bondt, Werner F M & Thaler, Richard, 1985. " Does the Stock Market Overreact?," Journal of Finance, American Finance Association, vol. 40(3), pages 793-805, July. [Downloadable!] (restricted)
  19. Masulis, Ronald W., 1987. "Changes in ownership structure : Conversions of mutual savings and loans to stock charter," Journal of Financial Economics, Elsevier, vol. 18(1), pages 29-59, March. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Börsch-Supan, Axel & Köke, Jens, 2000. "An applied econometricians' view of empirical corporate governance studies," ZEW Discussion Papers 00-17, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  2. Simon H. Kwan, 2004. "Risk and return of publicly held versus privately owned banks," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 97-107. [Downloadable!]
  3. Robert DeYoung & Kenneth Spong & Richard J. Sullivan, 1999. "Who's minding the store? motivating and monitoring hired managers at small, closely held firms: the case of commercial banks," Working Paper Series WP-99-17, Federal Reserve Bank of Chicago. [Downloadable!]
  4. Allen N. Berger & Emilia Bonaccorsi di Patti, 2002. "Capital structure and firm performance: a new approach to testing agency theory and an application to the banking industry," Finance and Economics Discussion Series 2002-54, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  5. Rajaa Mtanios & Mathieu Paquerot, 1999. "Structure de propriété et sous-performance des firmes:une étude empirique sur le marché au comptant, le règlement mensuel et le second marché," Working Papers FARGO 0991202, Université de Bourgogne - Latec/Fargo (Research center in Finance,organizational ARchitecture and GOvernance). [Downloadable!]
  6. Yamin Ahmad & Russell Kashian, 2008. "Modeling the Time to an Initial Public Offering: When does the Fruit Ripen?," Working Papers 08-01, UW-Whitewater, Department of Economics. [Downloadable!]
  7. Michael K. Berkowitz & Jiaping Qiu, 2001. "Ownership, Risk and Performance of Mutual Fund Management Companies," Working Papers berk-01-01, University of Toronto, Department of Economics. [Downloadable!]
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  8. Charles P. Himmelberg & R. Glenn Hubbard & Darius Palia, 2000. "Understanding the Determinants of Managerial Ownership and the Link Between Ownership and Performance," NBER Working Papers 7209, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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