Template-Type: ReDIF-Article 1.0 Author-Name: Konstantina Vartholomatou Author-X-Name-First: Konstantina Author-X-Name-Last: Vartholomatou Author-Name: Konstantina Pendaraki Author-X-Name-First: Konstantina Author-X-Name-Last: Pendaraki Author-Name: Athanasios Tsagkanos Author-X-Name-First: Athanasios Author-X-Name-Last: Tsagkanos Title: Corporate bonds, exchange rates and business strategy Abstract: We examine the relationship between corporate bonds and exchange rates in the USA and Greece highlighting asymmetries and volatility among markets. A theoretical framework is constructed to treat the issue of corporate bonds. The employed methodology concerns the QARDL-ECM that is applied to non-stationary regressors. In Greece, our key findings point that changes in corporate bonds are mainly driven by changes in exchange rates. The quantile estimates show that the strength of long-run relationship increases as the risk of default for the country diminishes. In the USA, both long-run and short-run relationships between variables are defined. The changes in exchange rates are mainly driven by changes in corporate bonds. The quantile estimates exhibit a non-symmetrical pattern of the relationship which is a clear evidence of possible financing problems in enterprises. A key contribution concerns the suggestion of a sound policy for the enterprises for attaining stable growth in an environment of financial stress and asymmetry. Journal: Int. J. of Banking, Accounting and Finance Pages: 97-117 Issue: 2 Volume: 12 Year: 2021 Keywords: corporate bonds; exchange rates; asymmetry; QARDL-ECM. File-URL: http://www.inderscience.com/link.php?id=114473 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:2:p:97-117 Template-Type: ReDIF-Article 1.0 Author-Name: Ngan Duong Cao Author-X-Name-First: Ngan Duong Author-X-Name-Last: Cao Author-Name: Vu Quang Trinh Author-X-Name-First: Vu Quang Author-X-Name-Last: Trinh Author-Name: Thanh Quoc Nguyen Author-X-Name-First: Thanh Quoc Author-X-Name-Last: Nguyen Title: Is the era of the day-of-the-week anomaly over? Abstract: While an extensive body of literature has investigated the existence of the day-of-the-week anomaly in different stock markets globally, their findings can only provide implications for potential arbitrage opportunities for domestic investors in the investigated markets. We, therefore, add to these studies by investigating the possibility of <i>international</i> arbitrage activities using such an anomaly, after accounting for currency risk. Initially, we re-confirm the disappearance of the effect in the US market (S%P500), implying that US domestic investors can no longer exploit the day-of-the-week trading strategy in their home market. Further, we test whether investors who use the US dollar as the main trading currency (including US investors) can exploit the anomaly in foreign markets. We employ the daily values of representative indices and the national currencies of the three ASEAN countries (Singapore, Thailand and Malaysia) from 1995 to 2014. We find that the anomaly is evident in all three markets and can be exploited by foreign investors. Furthermore, the Thai exchange is the best investment destination for foreign investors with the highest returns and lowest currency risk. The profitability of this trading strategy is independent of economic activities and significantly dependent on the performance and conditions of the financial markets. Journal: Int. J. of Banking, Accounting and Finance Pages: 118-140 Issue: 2 Volume: 12 Year: 2021 Keywords: stock exchange; anomaly; ASEAN markets; arbitrage; international investment; recession; financial crisis. File-URL: http://www.inderscience.com/link.php?id=114474 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:2:p:118-140 Template-Type: ReDIF-Article 1.0 Author-Name: Chris Brune Author-X-Name-First: Chris Author-X-Name-Last: Brune Author-Name: Kevin Lee Author-X-Name-First: Kevin Author-X-Name-Last: Lee Author-Name: Scott Miller Author-X-Name-First: Scott Author-X-Name-Last: Miller Title: Bank risk and charter value: the role of opacity Abstract: In this paper, we explore the linkage between bank opacity and bank charter value. We find that opacity contaminates charter value and therefore reduces the ability of charter value to restrain risk-taking in banking. As bank assets become more complex and opaque with the increased use of derivative assets like mortgage backed securities, asset backed securities, and collateralised debt obligations, etc., it becomes more difficult to gauge the true value of banks and the true risk of the bank activities. Journal: Int. J. of Banking, Accounting and Finance Pages: 141-157 Issue: 2 Volume: 12 Year: 2021 Keywords: banks; opacity; charter value; market discipline; financial crisis. File-URL: http://www.inderscience.com/link.php?id=114476 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:2:p:141-157 Template-Type: ReDIF-Article 1.0 Author-Name: Alfonso Del Giudice Author-X-Name-First: Alfonso Del Author-X-Name-Last: Giudice Author-Name: Giovanni Petrella Author-X-Name-First: Giovanni Author-X-Name-Last: Petrella Title: The CEO identity of sovereign wealth funds and target firms' performance Abstract: The impact of sovereign wealth funds (SWFs) on target firms' performance is unclear. Previous empirical studies find conflicting evidence, with some documenting a positive impact and others finding a negative impact on target firms' performance. In contrast to previous researchers, we include in the sample both listed and unlisted targets and reconsider the classification of political influence on SWF managerial decisions, observing the identity of the CEO rather than using the Truman score. We identify a 'political CEO' as such if s/he is a political officer or a former political officer or if s/he belongs to the same family as a political officer. Using a sample of 226 deals, we find evidence of an impact of SWF investments on target firms' performance. The presence of a political CEO has a positive impact on target firms' profitability, showing that closer ties to political power play an important role. Journal: Int. J. of Banking, Accounting and Finance Pages: 158-176 Issue: 2 Volume: 12 Year: 2021 Keywords: sovereign wealth fund; SWF; political connection; target firm performance. File-URL: http://www.inderscience.com/link.php?id=114477 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:2:p:158-176 Template-Type: ReDIF-Article 1.0 Author-Name: Isabel Maldonado Author-X-Name-First: Isabel Author-X-Name-Last: Maldonado Author-Name: Carlos Pinho Author-X-Name-First: Carlos Author-X-Name-Last: Pinho Author-Name: Francisco Rodríguez De Prado Author-X-Name-First: Francisco Rodríguez De Author-X-Name-Last: Prado Author-Name: Carla Azevedo Lobo Author-X-Name-First: Carla Azevedo Author-X-Name-Last: Lobo Title: Forecasting the yield curve with macroeconomic information - evidence from European markets Abstract: In this paper we analyse the predictive content of the introduction of macroeconomic variables in term structure dynamic models. We tested the dynamic models using data from the public debt, inflation rate and annual variation of the industrial production index for four European countries: Portugal, Spain, the UK and Germany. Results obtained for the period from January 1990 to December 2012 indicate that considering macroeconomic factors makes a positive contribution to the improvement of forecasts for different countries and maturities. However, the paper presents evidence of time-varying forecast accuracy, not only across yield maturities and forecast horizons, but also over data sub-periods. Journal: Int. J. of Banking, Accounting and Finance Pages: 177-200 Issue: 2 Volume: 12 Year: 2021 Keywords: yield curve; dynamic factor models; forecasting; out-of-sample forecasting evaluations. File-URL: http://www.inderscience.com/link.php?id=114478 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:2:p:177-200 Template-Type: ReDIF-Article 1.0 Author-Name: Chiara Pederzoli Author-X-Name-First: Chiara Author-X-Name-Last: Pederzoli Author-Name: Costanza Torricelli Author-X-Name-First: Costanza Author-X-Name-Last: Torricelli Title: An assessment of the Fundamental Review of the Trading Book: the capital requirement impact on a stylised financial portfolio Abstract: This paper assesses the impact on capital requirements of the Fundamental Review of the Trading Book (FRTB) based on a stylised financial portfolio sensible to the risk factors affected by the review. Our results show the order of magnitude of the increase across the two regulations and the two possible approaches: the standard approach and the internal model approach. We further disentangle the components of the expected increase implied by the FRTB. The most interesting result emerges for the internal model approach, whereby the increase in the capital charge is attributable not only to the change in the risk measure and the inclusion of longer liquidity horizons, but most importantly to the dampening of the diversification benefit. Journal: Int. J. of Banking, Accounting and Finance Pages: 389-403 Issue: 4 Volume: 12 Year: 2021 Keywords: Fundamental Review of the Trading Book; FRTB; capital requirements; trading portfolio; value-at-risk; VaR; stressed VaR; expected shortfall; liquidity risk; bank regulation; Basel Committee on Banking Supervision; BCBS. File-URL: http://www.inderscience.com/link.php?id=118588 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:4:p:389-403 Template-Type: ReDIF-Article 1.0 Author-Name: Panagiotis Tachinakis Author-X-Name-First: Panagiotis Author-X-Name-Last: Tachinakis Author-Name: Michalis Samarinas Author-X-Name-First: Michalis Author-X-Name-Last: Samarinas Title: Auditor's expertise and the effect of the European banking sector CEO skill on audit quality during the European financial crisis Abstract: The paper examines whether Eurozone banks that replace their CEOs with highly skilled ones, also switch to industry-expert auditors, thereby increasing the quality of auditing they receive. Using a sample of Eurozone banks, we develop a logistic regression model that incorporates auditor expertise as an audit quality determinant, audit opinion and directorship skill. Moreover, various proxies are used to control for the effect on the type of auditor opinion. The findings indicate that Eurozone banks alter their approach regarding auditor choice, after replacing their CEO with one with a higher level of directorship skill. Moreover, they seem to switch towards auditors specialising in the sector, thus increasing the quality of auditing, but only if they operate in a country facing fiscal sustainability issues. Robustness checks of the results are assertive of the validity of the conclusions reached. There are important implications arising from the study, highlighting that greater managerial performance is not necessarily reflective of financial health and stability. In fact, banks operating in a harsh financial environment may seek additional reassurance by establishing a higher quality of audit. Journal: Int. J. of Banking, Accounting and Finance Pages: 309-332 Issue: 4 Volume: 12 Year: 2021 Keywords: audit quality; Eurozone; banking; auditor expertise; CEO skills. File-URL: http://www.inderscience.com/link.php?id=118615 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:4:p:309-332 Template-Type: ReDIF-Article 1.0 Author-Name: Anna Merika Author-X-Name-First: Anna Author-X-Name-Last: Merika Author-Name: Ioannis Negkakis Author-X-Name-First: Ioannis Author-X-Name-Last: Negkakis Author-Name: Henry Penikas Author-X-Name-First: Henry Author-X-Name-Last: Penikas Title: Stress-testing and credit risk revisited: a shipping sector application Abstract: Conventional stress-testing in credit risk management may considerably underestimate economic losses associated with the most negative scenarios. In this paper, we show that in order to properly stress-test credit risk, we need to derive initially the default correlation among assets or companies. Then a risk measure needs to be applied to the stressed default rate distribution, in order to obtain default rates attached to the most negative scenarios. We find that the application of both the stressed default correlation and the risk measure deliver considerable deviations from the conventional approach. To illustrate our approach we use 192 publicly listed shipping corporations, over 2000-2016, and show that conventional stress-testing tools may underestimate losses under certain conditions. Furthermore, we show that the Vasicek (1987) model assumption of independence, between the systemic factor and the default correlation may not hold in certain cases. This assumption may actually be the reason for the likelihood of underestimation of credit risk capital requirements as applied in the context of the Basel internal ratings-based (IRB) approach. Journal: Int. J. of Banking, Accounting and Finance Pages: 347-367 Issue: 4 Volume: 12 Year: 2021 Keywords: default correlation; stress-testing; shipping industry; probability of default; internal ratings based; IRB. File-URL: http://www.inderscience.com/link.php?id=118624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:4:p:347-367 Template-Type: ReDIF-Article 1.0 Author-Name: Constantinos Chalevas Author-X-Name-First: Constantinos Author-X-Name-Last: Chalevas Author-Name: Panagiotis Giannopoulos Author-X-Name-First: Panagiotis Author-X-Name-Last: Giannopoulos Author-Name: Andreas Koutoupis Author-X-Name-First: Andreas Author-X-Name-Last: Koutoupis Author-Name: Angeliki Samara Author-X-Name-First: Angeliki Author-X-Name-Last: Samara Title: Evaluating the role and effectiveness of the audit committee on the quality of financial reporting: evidence from Greek PIEs Abstract: A new audit law was set in force in Greece in 2017 in accordance with the provisions of the European Regulation 537/2014, which reinforces the role of the audit committee (AC) and introduces new audit requirements. This study investigates the impact of the adoption of the new audit law on the quality of financial reporting. The used variables derived from the major law requirements and were measured appropriately using the responses of audit committees to a structured questionnaire developed to capture the compliance of the entities with the new law provisions. The sample is randomly selected, consists of 138 public interest entities (PIEs) for the year 2018 and concerns firms of various sizes and sectors. Our model contains a set of variables, solely derived from the new audit law. Audit committee composition and skills, its duty to make statutory auditors (or audit firms) understand the business of the entity as long with its responsibility for monitoring the independence of the statutory auditor and the effectiveness of the entity's internal quality control seem to significantly improve the quality of financial reporting. Journal: Int. J. of Banking, Accounting and Finance Pages: 368-388 Issue: 4 Volume: 12 Year: 2021 Keywords: audit committee; financial reporting; internal audit. File-URL: http://www.inderscience.com/link.php?id=118629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:4:p:368-388 Template-Type: ReDIF-Article 1.0 Author-Name: Anestis C. Ladas Author-X-Name-First: Anestis C. Author-X-Name-Last: Ladas Title: Future firm performance and textual characteristics of 10-K disclosures Abstract: The paper examines the influence of contextual information within 10-K reports on the future performance of a firm. Based on an earnings expectation model, we uncover the incremental informational contribution of two fundamental textual characteristics of 10-K disclosures on future performance; readability and the frequency of terms related to accounting judgement. We assert that the higher the use of terms relating to judgement in the 10-K reports, the higher the judgement exercised in the accounting procedures and the preparation of the financial statements. Both readability, measured either using 10-K's raw size or their word count and judgement sentiment are found to be positively related to future performance. Moreover, a cross-term of the two textual characteristics has incremental information content for future firm performance. Our findings indicate that textual analysis may offer an array of new information that is related to firm performance. Journal: Int. J. of Banking, Accounting and Finance Pages: 333-346 Issue: 4 Volume: 12 Year: 2021 Keywords: textual analysis; accounting judgement; firm performance; information asymmetry. File-URL: http://www.inderscience.com/link.php?id=118630 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:4:p:333-346 Template-Type: ReDIF-Article 1.0 Author-Name: Apostolos Kotzinos Author-X-Name-First: Apostolos Author-X-Name-Last: Kotzinos Author-Name: Dimitris Psychoyios Author-X-Name-First: Dimitris Author-X-Name-Last: Psychoyios Author-Name: Nikolaos Vlastakis Author-X-Name-First: Nikolaos Author-X-Name-Last: Vlastakis Title: The impact of ICT diffusion on sovereign cost of debt Abstract: We examine the effect of a country's level of information and communication technologies (ICT) diffusion on its credit rating and cost of debt. ICT diffusion is approximated using the Networked Readiness Index, which is designed to capture a country's capacity and preparedness to participate in the digital economy. We adopt a modified random effects approach which allows us to distinguish between short and long run effects on a dataset of 65 countries for a time span of ten years. We show that ICT have a significant impact on a country's credit rating and cost of debt which is robust to the presence of other variables proposed in the literature. The effect is stronger for non-OECD countries, indicating a pathway for developing countries to improve their access to debt markets. Our conclusions are robust to the advent of the recent financial crisis. Journal: Int. J. of Banking, Accounting and Finance Pages: 16-51 Issue: 1 Volume: 12 Year: 2021 Keywords: credit ratings; sovereign debt; information and communication technologies; ICT; e-readiness; developing countries. File-URL: http://www.inderscience.com/link.php?id=111802 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:1:p:16-51 Template-Type: ReDIF-Article 1.0 Author-Name: Lawal Tolulola Author-X-Name-First: Lawal Author-X-Name-Last: Tolulola Title: The relevance of annual general meetings: recent evidence from the UK Abstract: Using over 14,000 hand-collected annual general meeting dates of UK firms over the period 2004 to 2014, the study provides some evidence in support of the information content hypothesis from the analysis of price and volume reactions around annual general meetings. In addition, the study finds some support for an increase in the information content of annual general meetings during the study period. Our results show that both the magnitude of abnormal return and the temporal variation in the information content of annual general meetings depend on a number of firm characteristics that capture firms' information environment. Journal: Int. J. of Banking, Accounting and Finance Pages: 52-74 Issue: 1 Volume: 12 Year: 2021 Keywords: corporate governance; annual general meetings; AGMs; information content hypothesis; event study; abnormal return; abnormal volume; UK; value relevance. File-URL: http://www.inderscience.com/link.php?id=111804 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:1:p:52-74 Template-Type: ReDIF-Article 1.0 Author-Name: Lin Tian Author-X-Name-First: Lin Author-X-Name-Last: Tian Author-Name: Liang Han Author-X-Name-First: Liang Author-X-Name-Last: Han Title: Nurturing regional innovation: the effects of bank competition in the USA Abstract: Whilst corporate innovation is one of the key drivers of regional economic growth, question remains over how regional corporate activities are affected by local banking market structure. By attaching regional corporate innovation activities to a market power hypothesis, this paper examines: 1) if regional innovation activities would benefit from the improved banking market competition; 2) the variation of banking market competition effects on innovation outputs over unique regional characteristics, such as state-level R%D intensity and distribution of innovation activities. Using patent and citation data and local bank data from 51 states in the USA between 1992 and 2004, we show that improved local banking market competition increases both the quantity (patents) and quality (citations) of regional innovation outputs. It is also found that such a favourable effect on regional innovation is especially stronger for those states with low R%D intensity and those with more concentrated innovation activities. Journal: Int. J. of Banking, Accounting and Finance Pages: 75-96 Issue: 1 Volume: 12 Year: 2021 Keywords: regional innovation; banking market; R%D intensity; USA. File-URL: http://www.inderscience.com/link.php?id=111805 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:1:p:75-96 Template-Type: ReDIF-Article 1.0 Author-Name: Ullas Rao Author-X-Name-First: Ullas Author-X-Name-Last: Rao Author-Name: Vincent Charles Author-X-Name-First: Vincent Author-X-Name-Last: Charles Title: An empirical examination of the efficiency of commodity markets in India Abstract: In this paper, we examine the efficiency of commodity markets in India by resorting to a rigorous econometric model, namely the cost-of-carry model. By underscoring the need to establish a relationship between the futures and spot markets (given that they depict a time-series behaviour), the proposed model is better positioned to perform the empirical examination of market efficiency when compared to alternative models (such as the variance-ratio test, Jarque-Bera test, and runs test, among others) that have traditionally relied upon the observed behaviour of spot prices alone to achieve the set objective. A review of the existing literature points towards a lack of studies that use statistically robust models, such as cointegration regression, to assess the efficiency of commodity markets in emerging economies. This is particularly true for India, where prices of commodities with their associated impact on inflation always posit a politically sensitive scenario. Journal: Int. J. of Banking, Accounting and Finance Pages: 1-15 Issue: 1 Volume: 12 Year: 2021 Keywords: commodity markets; market efficiency; cointegration regression; cost-of-carry; India. File-URL: http://www.inderscience.com/link.php?id=111818 File-Format: text/html File-Restriction: Open Access Handle: RePEc:ids:injbaf:v:12:y:2021:i:1:p:1-15 Template-Type: ReDIF-Article 1.0 Author-Name: Mohamed Amin Chakroun Author-X-Name-First: Mohamed Amin Author-X-Name-Last: Chakroun Author-Name: Mohamed Imen Gallali Author-X-Name-First: Mohamed Imen Author-X-Name-Last: Gallali Title: Dependence between Islamic banks and conventional banks and risk factors Abstract: This study aims to identify the risk factors amplifying the contagion risk between the Islamic to conventional banks. Using the copula approach and the panel VAR model, findings justify the presence of a dependent relationship between the two types of banks, where the sense of causality of this phenomenon is unidirectional derived from conventional to Islamic banks. Hence, our results indicate that the market risk, the credit risk and the size of the financial institution represent the major factors triggering the contagion risk between both types of banks. To this extent, Islamic banks should consider more restricted standards to be able to ensure their independence and to handle their contagion risk. Journal: Int. J. of Banking, Accounting and Finance Pages: 201-239 Issue: 3 Volume: 12 Year: 2021 Keywords: Islamic finance; contagion; systemic risk; copula; marginal expected shortfall; MES; panel VAR; GJR-DCC-GARCH. File-URL: http://www.inderscience.com/link.php?id=116189 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:3:p:201-239 Template-Type: ReDIF-Article 1.0 Author-Name: In Jung Song Author-X-Name-First: In Jung Author-X-Name-Last: Song Title: Accruals quality and analyst forecast accuracy: evidence from the property-casualty insurance industry Abstract: This paper examines the association between property-casualty insurer accruals quality and analysts' earnings forecasts (i.e., accuracy and dispersion of forecasts). Using insurer-specific accruals, loss reserves, we calculate accruals quality which can be decomposed into its innate and discretionary components. Our results provide evidence that higher accruals quality - as measured by lower standard deviation of loss reserve errors - is positively associated with analysts' forecast accuracy. In other words, our results suggest that analysts provide less accurate forecasts for firms with higher reserve error volatility. Also, we show that lower accruals quality is associated with higher forecast dispersion indicating more disagreement among analysts. Our results hold consistent with decomposed components of accruals, innate and discretionary, and conclude that both managerial discretion and basic operations of firms affect insurers analysts' earnings forecasts. Journal: Int. J. of Banking, Accounting and Finance Pages: 240-265 Issue: 3 Volume: 12 Year: 2021 Keywords: insurance; earning management; loss reserves; loss reserve error volatility; managerial discretion; accruals quality; analyst forecast; earnings forecast; property-casualty insurers. File-URL: http://www.inderscience.com/link.php?id=116190 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:3:p:240-265 Template-Type: ReDIF-Article 1.0 Author-Name: Dimitrios Anastasiou Author-X-Name-First: Dimitrios Author-X-Name-Last: Anastasiou Author-Name: Konstantinos Drakos Author-X-Name-First: Konstantinos Author-X-Name-Last: Drakos Title: Borrowers' perceptions of lending conditions: worlds apart or closer than close? Abstract: Given that lenders and borrowers interact in the same (credit) market, an interesting research question that arises is whether the demand side of the market correctly comprehends the actual credit market conditions that are primarily shaped by the supply side. We explore this by utilising available surveys conducted separately for the two sides of the credit market and empirically investigate whether, and by which mechanism, demand-side perceptions relate to supply-side credit conditions. Our results indicate that demand-side perceptions do not match one-for-one supply-side conditions, but are rather described by an adaptive mechanism. This mechanism suggests that demand-side perceptions are modified every period by a fraction of the last period's perception error. Additionally, we find that demand-side perceptions systematically overshoot the actual conditions, and this overshooting is accentuated for periphery countries and smaller firms. Journal: Int. J. of Banking, Accounting and Finance Pages: 285-307 Issue: 3 Volume: 12 Year: 2021 Keywords: loan terms and conditions; bank lending conditions; bank lending survey; survey of access to finance; borrowers' perceptions. File-URL: http://www.inderscience.com/link.php?id=116201 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:3:p:285-307 Template-Type: ReDIF-Article 1.0 Author-Name: Chen Huang Author-X-Name-First: Chen Author-X-Name-Last: Huang Title: Does CEO overconfidence matter for shareholders' wealth? Evidence from the UK takeover market Abstract: This study examines how CEO overconfidence affects shareholders' wealth (e.g., stock returns) in mergers and acquisitions (M%As). The main measure adopted to link CEO overconfidence is based on whether a CEO holds stock options until the year before the expiration date. Using a sample of M%As in the UK, we document that acquiring firms' stock returns are negatively affected around the announcement date if their CEOs are characterised by overconfidence. The results hold after addressing omitted variable concerns and using a propensity score matching (PSM) analysis. The findings are also robust to the implementation of the alternative measure of managerial overconfidence, such as media portrayal of CEOs. This study offers an important implication for firms to mitigate CEO overconfidence in order to protect the interests of shareholders. Journal: Int. J. of Banking, Accounting and Finance Pages: 266-284 Issue: 3 Volume: 12 Year: 2021 Keywords: CEO overconfidence; hubris; M%As; stock options; shareholders' wealth; UK. File-URL: http://www.inderscience.com/link.php?id=116221 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:injbaf:v:12:y:2021:i:3:p:266-284