by : Alessandro Carretta
Abstract*
This paper analyses the casual relationship between corporate culture and shareholder value using a sample of
large banks in the French, German, Italian and U.K. banking systems over the 2000 to 2003 period. Firstly, we measure shareholder value using an Economic Value Added estimated through a procedure tailored to account for banking peculiarities. Secondly, we measure corporate culture using language as its particular artifact and developing a cultural survey based on the application of a text-analysis model to a corpus of reference texts produced by the sample of banks. We posit six hypotheses regarding the relationship between corporate culture and bank profits and shareholder value. Our results noticeably show that bank profits and shareholder value benefit from different orientations of banking corporate culture.
large banks in the French, German, Italian and U.K. banking systems over the 2000 to 2003 period. Firstly, we measure shareholder value using an Economic Value Added estimated through a procedure tailored to account for banking peculiarities. Secondly, we measure corporate culture using language as its particular artifact and developing a cultural survey based on the application of a text-analysis model to a corpus of reference texts produced by the sample of banks. We posit six hypotheses regarding the relationship between corporate culture and bank profits and shareholder value. Our results noticeably show that bank profits and shareholder value benefit from different orientations of banking corporate culture.
JEL classification: G21, D24, M14
Keywords: Shareholder value, Economic Value Added (EVA), Corporate culture, Text analysis.
Keywords: Shareholder value, Economic Value Added (EVA), Corporate culture, Text analysis.
1. INTRODUCTION
This paper empirically investigates the relationship between bank performance and corporate culture in European banking using a sample of quoted banks over the 2001 to 2003 period. There is a substantial literature dealing with bank performance and shareholder value1, but only few studies attempted to see to an empirical analysis of the relationship with business conditions that may lead to the creation of shareholder value.
A number of studies (Beccalli, Casu, Girardone, 2006; Fernández, Gascón, González, 2002; Eisenbeis, Ferrier, Kwan, 1999; Chu, Lim, 1998) have sought to link measures of bank productive efficiency to stock returns, generally finding a positive relationship. However these studies do not really tell us much about the determinants of shareholder value creation as cost of capital considerations are, typically, ignored. A second shareholder value determinant is customer satisfaction: the link between customer satisfaction and shareholder value creation has also been identified in the theoretical literature (Bauer, Hammerschimidt, 2005) and empirically investigated with respect to non-financial companies (Van der Wiele, Boselie, Hesselink, 2001) yet only one study (Loveman, 1998) provides evidence about how employee satisfaction and customer loyalty positively influence bank performance (using data from branches of a large U.S. regional bank). Others have investigated the relationship between operational risk and bank stock price reactions (Cummings, Lewis, Wei., 2004) and the role played by corporate risk management in the shareholder value creation process (Bartram, 2000 and 2002). Overall, however, it can be seen that the extant empirical literature on the determinants of shareholder value creation in banking is somewhat esoteric and limited.
Following Schein (1985), the corporate culture is defined as a set of shared norms and values expressed in terms of common language, shared coding procedures and shared knowledge. The hypothesis that corporate culture is a . . . ..(baca_selengkapnya)
This paper empirically investigates the relationship between bank performance and corporate culture in European banking using a sample of quoted banks over the 2001 to 2003 period. There is a substantial literature dealing with bank performance and shareholder value1, but only few studies attempted to see to an empirical analysis of the relationship with business conditions that may lead to the creation of shareholder value.
A number of studies (Beccalli, Casu, Girardone, 2006; Fernández, Gascón, González, 2002; Eisenbeis, Ferrier, Kwan, 1999; Chu, Lim, 1998) have sought to link measures of bank productive efficiency to stock returns, generally finding a positive relationship. However these studies do not really tell us much about the determinants of shareholder value creation as cost of capital considerations are, typically, ignored. A second shareholder value determinant is customer satisfaction: the link between customer satisfaction and shareholder value creation has also been identified in the theoretical literature (Bauer, Hammerschimidt, 2005) and empirically investigated with respect to non-financial companies (Van der Wiele, Boselie, Hesselink, 2001) yet only one study (Loveman, 1998) provides evidence about how employee satisfaction and customer loyalty positively influence bank performance (using data from branches of a large U.S. regional bank). Others have investigated the relationship between operational risk and bank stock price reactions (Cummings, Lewis, Wei., 2004) and the role played by corporate risk management in the shareholder value creation process (Bartram, 2000 and 2002). Overall, however, it can be seen that the extant empirical literature on the determinants of shareholder value creation in banking is somewhat esoteric and limited.
Following Schein (1985), the corporate culture is defined as a set of shared norms and values expressed in terms of common language, shared coding procedures and shared knowledge. The hypothesis that corporate culture is a . . . ..(baca_selengkapnya)
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