Banks as shareholders: Conflict of interest or efficient corporate governance? The case of Germany.

摘要

This dissertation examines the conflict of interest problems of banks as creditors and shareholders. More specifically, the dissertation deals with a situation where a bank is the creditor of a financially distressed firm and a shareholder of one of that firm's major competitors. In this situation, are banks more or less likely to restructure the debt of a creditor?; In a sample of 19 publicly traded firms that had to file for Vergleich (court composition proceedings) between 1990 and 1999, nine successfully restructure their debt and ten are liquidated. Companies that successfully restructure have less intangible assets and owe less of their debt to banks. Similar studies for the US find the exact opposite, which leads the conclusion that other factors must influence that decision, one of them being a creditor's shareholdings in a competitor.; If a conflict of interest exists, the bank and the competitor should show positive excess returns on the date of the court composition filing. Cumulative average returns are negative, but insignificant during the event window. Splitting the sample into banks and competitors reveals positive returns for the competitors and negative returns for the banks. This indicates that the bankruptcy events are not industry specific. Furthermore, the evidence suggests that the market does not see a conflict of interest for the bank in this situation.; In summary, the study suggests that the factors that determine the likeliness of debt restructuring in financial distress situations are different in the US and Germany. However, there is no evidence that the role of a bank as a shareholder creates a significant conflict of interest situation that would explain the differences.