Title: Shareholder value in European banks after the global financial crisis: an empirical analysis

Authors: Matteo Cotugno; Simona Galletta; Sebastiano Mazzù

Addresses: Department of Management, University of Bologna, Via Capo di Lucca, 34, Bologna, 40126, Italy ' Department of Economics and Business, University of Catania, Corso Italia, 55, 95129, Catania, Italy ' Department of Economics and Business, University of Catania, Corso Italia, 55, 95129, Catania, Italy

Abstract: This paper investigates the determinants of shareholder value in European banks over a seven-year period from 2011 to 2017. Using a panel fixed effects regression model, we find that banks that focused more on traditional lending activities and increased their risk-taking level generate greater shareholder value. Shareholder value is a persistent variable over time; bank size has a positive impact on shareholder value, while financial leverage has a negative influence. We also find a negative relationship between gross domestic product per capita (GDPPC) and shareholder value. Further analyses were conducted by clustering the sample into subsamples based on GDPPC, the density of bank branches and bank size. The main results are confirmed with a robustness check using a two-step IV-GMM estimate.

Keywords: shareholder value; banks; economic value added; EVA.

DOI: 10.1504/IJADS.2021.117450

International Journal of Applied Decision Sciences, 2021 Vol.14 No.5, pp.477 - 497

Received: 25 Oct 2019
Accepted: 03 Apr 2020

Published online: 09 Jul 2021 *

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