Value-based management in banking: The effects on shareholder returns

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

Authors

  • Christian Schmaltz
  • Rainer Lueg
  • Jesper Agerholm
  • Kasper Wittrup

In this study, we explore the drivers of total shareholder returns (TSR) in commercial banks, and investigate whether banks subscribing to Value-based Management (VBM) outperform the nonadopters in terms of TSR. We estimate a TSR model using data from 132 listed commercial European and North American banks. First, we demonstrate that banks that have publicly adopted VBM in their operative Management Control Systems (MCS) outperform non-VBM-banks. On average, VBM-adopters generate a 5.8%-points higher annual TSR. They also outperform non-VBM-banks in terms of profitability, growth, and liquidity. Second, we find that banks focus on key performance indicators (KPIs) such as the cost-income ratio, which are sub-optimal indicators of TSR. We suggest the implementation of indicators that are more closely related to TSR, such as return on assets or loan loss provisioning. So far, only a few banks (10%-45%) have considered these KPIs in their MCS. A shift towards our suggested KPIs might even further improve the performance of VBM-adopters. Controlling for macro-economic factors, our findings are stable before and after the financial crisis in 2008.

OriginalspracheEnglisch
ZeitschriftInternational Journal of Business Science and Applied Management
Jahrgang14
Ausgabenummer1
Seiten (von - bis)35-50
Anzahl der Seiten16
ISSN1753-0296
PublikationsstatusErschienen - 2019

Zuletzt angesehen

Publikationen

  1. Design It!
  2. Empirische Erfassung eines „messy constructs“
  3. I Am Not A Hacker
  4. Kombinatorik mit Ziffernkarten
  5. Gemeinsam lernen mit Selbstlernprogrammen
  6. The challenge of managing multiple species at multiple scales
  7. Back to the future
  8. Temporary organizing and acceleration
  9. Portal als Experimentalsystem
  10. A review of FEM code accuracy for reliable extrusion process analysis
  11. Multimodal analysis of spatially heterogeneous microstructural refinement and softening mechanisms in three-pass friction stir processed Al-4Si alloy
  12. Leveling up? An inter-neighborhood experiment on parochialism and the efficiency of multi-level public goods provision
  13. Microstructure and properties of magnesium alloy Mg-1Zn-1Ca (Zx11)
  14. Europe and the Media
  15. Logotoaster
  16. Predictive modeling in e-mental health
  17. Paradigm shift
  18. Gutes Leben vor Ort
  19. Demographic change in work organizations
  20. Generalising IRT to Discriminate Between Examinees
  21. The five-factor asset pricing model – A theoretical review and assessment
  22. Forecasting Government Bond Yields with Neural Networks Considering Cointegration
  23. Development of a procedure for forming assisted thermal joining of tubes
  24. Financing behavior in new ventures - Evidence from Germany
  25. Investing into third generation nuclear power plants - Review of recent trends and analysis of future investments using Monte Carlo Simulation
  26. Kulturelle Funktionen der Science Fiction
  27. Interspecific and intraspecific variation in specific root length drives aboveground biodiversity effects in young experimental forest stands
  28. Nucleation kinetics of the γ-phase in a binary Mg-Al alloy
  29. Biodegradable green composites
  30. Quo vadis, EU-Umweltberichterstattung?
  31. Exports and Productivity Growth
  32. Chasing the difference
  33. Digital naturalism
  34. Useful synthetic reagents derived from 1-triisopropylsilylpropyne and 1,3bis-[triisopropylsilyl]propyne, direct, stereoselective synthesis of either Z or E enynes
  35. Spatial imaginaries in flood risk management: insights from a managed retreat initiative in upper Bavaria