VOLUME XIII
AUTUMN 2005

THE EFFECT OF BANK EQUITY STAKE ON INDUSTRIAL CORPORATE PERFORMANCE AND RISK
 
ANA ROSA FONSECA
FRANCISCO GONZÁLEZ

Universidad de Oviedo
 
This paper analyzes the change of corporate performance and risk after stock banks buy or sell equity of commercial firms. The results are consistent with a positive effect of bank equity stakes on firm efficiency because commercial firms increase (decrease) their adjusted return in the two years following the equity acquisition (sale) by a stock bank. The decrease (increase) of corporate risk after bank equity acquisition (sale) also indicates that banks pursue their debtholders’s interest once they become shareholders and increase their control in the firm. In line with this argument, the increase of risk after the sale of the bank shareholding is positively related to the bank debt in the firm.
 
Key words: bank equity stake, affiliation banking-commerce, corporate performance, corporate risk.
JEL classification: G21, G24 and G28.

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