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BANK HOLDING COMPANY EXPANSION: A REFOCUS ON ITS FINANCIAL RATIONALE
Author(s) -
Frieder Larry A.,
Apilado Vincent P.
Publication year - 1983
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1983.tb00313.x
Subject(s) - valuation (finance) , shareholder , equity (law) , univariate , business , actuarial science , debt , commercial bank , empirical research , economics , accounting , finance , multivariate statistics , computer science , mathematics , corporate governance , machine learning , political science , law , statistics
This paper addresses managerial motivation, stockholder motivation, organizational effects of affiliation, and the proper analytical approach to study bank holding companies. A consolidated entity viewpoint is employed. A valuation model is developed and empirically implemented in which important factors such as intra‐organizational effects, service fees, expanded debt capacity, and equity adjustments are considered. These factors have been ignored by conventional studies. In addition, this study's methodology extends considerably that of the prior studies incorporating a consolidated entity valuation approach. A valuation model, despite its requirements for highly specific empirical data, is generally superior over univariate, multivariate, and market models in assessing BHC performance.