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Friday 03 November 2017

Rethinking Bank Shareholder Equity

Imke GRAEFF, doctorante du programme ESCP Europe, soutiendra sa thèse dans le cadre de l'Ecole Doctorale de Management Panthéon-Sorbonne.

Titre: "Rethinking Bank Shareholder Equity"

Cette soutenance est publique et se tiendra le 17 novembre 2017 à 14h00, ESCP Europe, salle 4210.

Directeur de Recherche :

  • Prof. Yuri BIONDI, Chargé de Recherche, CNRS - IRISSO (UMR 7170) Université Paris Dauphine (anciennement professeur Associé ESCP Europe)


Rapporteurs :

  • Prof Colin HASLAM, Queen Mary University of London
  • Prof. Konstantinos SERGAKIS, University of Glasgow


Suffragants :

  • Prof Shyam SUNDER, Yale School of Management
  • Prof Pierre-Charles PRADIER, Universite Paris 1 Pantheon-Sorbonne

 

Abstract :

The thesis introduces a new accounting method based upon the distinction between shareholder equity and the residual entity equity. Shareholder equity presents the actual contributions of shareholders to the bank entity. It allows for the analysis of bank’s equity position in light of a transformed idea of shareholding as experienced in recent years. The measure identifies and visualises equity transactions of banks relating to shareholders; and with it, allows for the analysis of the two main shaping forces of bank equity: financialized corporate strategy which seeks to economize the bank equity position; and regulatory capital which provides a risk buffer to absorb eventual losses. Addressees of these two forces are shareholders who pressure banks to follow generous distribution policies and society at large which demands a safe and sound banking system. This trade-off between return to shareholders and a sufficient equity base is well documented in the pre-crisis and post-crisis period. Our analysis of shareholder equity position applies to nine European banks between 2001 and 2015. It reveals substantial distributions at the detriment of financial solvency concerns. Shareholder contributions to the bank entity as well as to regulatory capital were limited in the pre-crisis period, with rather modest improvements in the post-crisis period despite substantial capital injections. Findings suggest that, in an era of financialized corporate strategy, sufficient levels of high quality capital are essential to safeguard general interest and prevent banks to become financial investment vehicles for their shareholders.

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