Does Geographic Proximity Change the Passiveness of Equity Ownership by Bank Trust?*

摘要

We provide evidence that while concentrated bank trust ownership is passive with distant firms, it is nonpassive with local firms and reduce their risk-taking. Concentrated local bank trust ownership is associated with (i) lower future firm equity beta and (ii) less uncertain corporate policies. The results cannot be explained by private information alone, are not driven by local bank trusts as a mixed debt-equity holder, and are robust to various tests for endogeneity. We also explore channels through which local bank trusts could exert their influence, including their stabilizing function during crisis periods and joining force with local independent directors.