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

Research output: Journal contributionsJournal articlesResearchpeer-review

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.

Original languageEnglish
JournalInternational Journal of Business Science and Applied Management
Volume14
Issue number1
Pages (from-to)35-50
Number of pages16
ISSN1753-0296
Publication statusPublished - 2019

    Research areas

  • Banks, Total shareholder return, Value drivers, Value-based management
  • Management studies

Recently viewed

Activities

  1. Supporting Enlightened Public Thought - 2020
  2. Workshop „Different Worlds of Political Party Development. Comparative Analysis of the Institutionalization of Political Parties“
  3. Conception of a heat storage system for household applications
  4. Anthropocene Campus 2016: The Technosphere Issue
  5. Resource use and competition between honey bees and wild bees in the Lüneburger Heath
  6. Fostering Oral Skills Through the Use of Participatory Web 2.0 Technologies in the Project-based EFL Classroom
  7. Three steps forward, two steps backward: How distributed field governance causes incremental practice change in the case of integrated health care in Germany
  8. Zootechnologies. A Media History of Swarm Intelligence
  9. Conference "FICTION AND SIMULATION: Theories, Methods, Practices" - 2015
  10. 6th Workshop on Unintended Consequences
  11. Introducing the Teacher Education Network In Lüneburg. Theory-Practice-Interrelation through Transdisciplinary Cooperation
  12. Einführung in SPSS: Computergestützte Auswertung statistischer Daten
  13. Towards an International Keywords for Children's Literature (Roundtable): Presenters: Lissa Paul, Philip Nel, Nina Alonso, Nina Christensen, Francesca Orestano and Emer O’Sullivan
  14. HyperKult XII - Computer als Medium: analog digital
  15. Universities as Transformative Locations for Sustainable Approaches to Science: Network of Early-Career Sustainable Scientists and Engineers’
  16. Digital–Sustainable Co-Transformation
  17. Edward Lear: Limerick
  18. Enlightened Mythology.: Thomas Mann and Myth
  19. Did we take the spatial turn? Tracing organizational space from paperwork to digitalization
  20. Determinants of entrepreneurial intent: A meta-analystic test and integration of competing models
  21. PhD Masterclass ''Discourse Theoretical Approaches to Politics, Society, Communication and Media" - 2019
  22. IDG Summit 2023

Publications

  1. Which nudges get support - A Quantitative Analysis of the Dimensions Transparency and Dual Process Theory
  2. Deconstructing and reconstructing diversity in client-provider-relationships of social work
  3. Integration durch soziale Kontrolle?
  4. Enhancing the structural diversity between forest patches — A concept and real-world experiment to study biodiversity, multifunctionality and forest resilience across spatial scales
  5. Editorial introduction to the special issue on crises at work
  6. Augmented space
  7. Animating embryos
  8. Ob lang oder kurz, berührbar oder nicht: Ist die Längenschätzkompetenz eindimensional?
  9. Polycrisis patterns
  10. Trans pixelate substitution scheme for denoising computed tomography images towards high diagnosis accuracy
  11. Drawing as a Generative Activity and Drawing as a Prognostic Activity
  12. To settle or protect? A global analysis of net primary production in parks and urban areas
  13. Worauf warten?
  14. Thinking and Diagrams - An Introduction
  15. Making mutual learning tangible
  16. Emergency Politics After Globalization
  17. Introduction
  18. The Role of Formalisation, Participation and Context in the Success of Public Involvement Mechanisms in Resource Management
  19. Secondary task as a measure of cognitive load
  20. Neural Networks for Energy Optimization of Production Processes in Small and Medium Sized Enterprises
  21. Path dependence and technological expectations in transport policy
  22. Real fake? Appropriating mobility via Schengen visa in the context of biometric border controls
  23. Influence of Dy in solid solution on the degradation behavior of binary Mg-Dy alloys in cell culture medium
  24. Jointly experimenting for transformation?