IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/11990.html
   My bibliography  Save this paper

Quality of governance and bank valuation in Russia: An empirical study

Author

Listed:
  • Bokov, Vassily
  • Vernikov, Andrei

Abstract

This paper aims at explaining the differences in valuation of banking firms in Russia from a quality of governance point of view. A sample of acquisition deals and public offerings over the last 5 years is collected with the view of discovering factors that investors deem significant in making a decision whether to invest in a given banking firm and, if so, at what price. We use price-to-book-value of equity (P/BV) multiple as standard measurement of valuation and the dependent variable. As for explanatory variables, we put together a set of proxies for quality of bank governance and management, such as degree of concentration of control, managerial experience, degree of compliance with corporate governance best practices (e.g. degree of Board independence, qualification of external auditors), stability of bank’s governing bodies (Management Board and Board of Directors), and availability of external credit ratings. We find out which factors are statistically significant and relevant. A least squares multiple linear regression model is devised to check how individual variables explain the differences in valuation. We discover that external investors attach value to high concentration of ownership, sheer size of the bank, stability of the governing bodies, involvement of well-established external auditors and also that strategic investors tend to pay higher acquisition premiums. The features of the Board of Directors such as its independence, maturity and stability appear to create less value if any.

Suggested Citation

  • Bokov, Vassily & Vernikov, Andrei, 2008. "Quality of governance and bank valuation in Russia: An empirical study," MPRA Paper 11990, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:11990
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/11990/1/MPRA_paper_11990.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, vol. 10(5), pages 703-728, November.
    2. Randall Morck & Daniel Wolfenzon & Bernard Yeung, 2004. "Corporate Governance, Economic Entrenchment and Growth," NBER Working Papers 10692, National Bureau of Economic Research, Inc.
    3. repec:aea:jeclit:v:43:y:2005:i:3:p:655-720 is not listed on IDEAS
    4. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    5. repec:hrv:faseco:30747162 is not listed on IDEAS
    6. Black, Bernard, 2001. "The corporate governance behavior and market value of Russian firms," Emerging Markets Review, Elsevier, vol. 2(2), pages 89-108, June.
    7. Black, Bernard S. & Love, Inessa & Rachinsky, Andrei, 2006. "Corporate governance indices and firms' market values: Time series evidence from Russia," Emerging Markets Review, Elsevier, vol. 7(4), pages 361-379, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Muravyev, Alexander, 2017. "Boards of directors in Russian publicly traded companies in 1998–2014: Structure, dynamics and performance effects," Economic Systems, Elsevier, vol. 41(1), pages 5-25.
    2. repec:nos:voprec:2017-04-1 is not listed on IDEAS
    3. Vassily Bokov & Andrei Vernikov, 2008. "Possible impact of corporate governance profile on a Russian bank valuation," UCL SSEES Economics and Business working paper series 95, UCL School of Slavonic and East European Studies (SSEES).

    More about this item

    Keywords

    Bank; corporate governance; valuation; Russia;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:11990. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.