The relation between bank equity ownership and firm behavior: empirical evidence from Thailand

Abstract

The international evidence on the benefits of bank equity ownership is not conclusive. This study provides additional evidence on the hypothesized benefits of bank equity ownership by examining the relation between bank equity ownership and firm behavior in Thailand. The sample consists of Thai companies that have commercial banks as top ten shareholders and Thai companies that do not have banks as top ten shareholders. Empirical results indicate that bank equity ownership is not significantly related to firm behavior, as measured by profitability, information asymmetry, financing decisions and agency problems. Further examination reveals that a significant presence of insider holdings in Thailand may explain the results These findings cast some doubt on the generalizability of the European and Japanese experience in emerging economies.