Multiple goals and ownership structure : effects on the performance of Spanish savings banks.

Spanish savings banks (SBs) are financial institutions with a wide mission that includes different stakeholders’ goals. Profit maximization is only one among several goals, and the widespread use of cost or profit efficiency as the only comparative performance measure may prove to be insufficient in this context. To overcome this problem, we build an aggregate performance index for organizations with multiple goals. Furthermore, we show how the ownership structure of SBs influences their economic behavior in two basic ways: (1) the performance level and (2) their goal priorities. In particular, we distinguish two types of ownership structures in our application, namely, organizations controlled by Public Administrations and those controlled by insiders (i.e. managers and workers). Our results indicate that each type has different priorities and differ in their performance indexes. More specifically, the empirical analysis shows that insider-controlled SBs favor goals related to profit maximization and the universal access to financial services and, furthermore, they perform better. In contrast, contributing to regional development becomes the most favored goal when Public Administrations have a majority in the bank.

CEO turnover in public and private organizations: analysis of the relevance of different performance horizons

Purpose – This paper investigates how past performance changes, prior CEO replacements and changes in the chairperson impact CEO turnover in public and large private businesses. Design/methodology/approach – We analyze 1,679 CEO replacements documented in a sample of 1,493 Spanish public and private firms during 1998–2004 by computing dynamic binary choice models that control for endogeneity in CEO turnovers. Findings – The results reveal that different performance horizons (short- and long-term) explain the dissimilar rate of CEO turnover between public and private firms. Private firms exercise monitoring patience and path dependency characterizes the evaluation of CEOs, while public companies’ short-termism leads to higher CEO turnover rates as a reaction to poor short-term economic results, and alternative controls—ownership and changes in the chairperson—improve the monitoring of management. Originality/value – Our results show the importance of controlling for path dependency to examine more accurately top executives’ performance. The findings confirm that exposure to market controls affects the functioning of internal controls in evaluating CEOs and shows a short-term performance horizon that could be behind the recent moves of public firms going private or restraining shareholders’ power.Peer ReviewedPostprint (published version

Corporate governance and the Mondragón cooperatives.

This paper builds upon recent advances in the corporate governance framework to extend and complement the economic literature on producer cooperatives. We argue that the problem of governance in a cooperative is twofold and consists in designing mechanisms and setting up institutions that (1) encourage workers to define a goal that maximizes workers’ welfare and (2) induce managers to pursue and internalize such a broad goal. When compared to capital-controlled firms, the agency problems become more complex and harder to solve in the cooperative framework. As empirical evidence of this problem and its corresponding solution, we illustrate the case of the Mondragón cooperatives, explaining in detail the incentive system and the control mechanisms now in place in this successful business group. The study of the governance architecture of Mondragón may help us to propose solutions to traditional problems of the cooperative firm and to reach a better understanding of both the governance of cooperatives and corporate governance in general.

Evaluación de la eficiencia con múltiples fines : una aplicación a las cajas de ahorro.

En este trabajo elaboramos un índice de la eficiencia global alcanzada por una organización cuando su actuación se dirige a la maximización de una misión con fines diversos que pueden responder a diferentes colectivos. La ventaja de este índice es que permite la agregación de fines expresados en unidades heterogéneas y sobre los que no existen precios de mercado. Nuestra propuesta también requiere menos información sobre la tecnología subyacente que transforma los factores productivos. La técnica utilizada asigna pesos a cada uno de los fines, definiendo así su importancia dentro de la misión, y ofrece también la posibilidad de restringir los valores de dichos pesos, pudiendo elaborarse un nuevo índice que incorpore las preferencias del legislador. La metodología propuesta se aplica a las cajas de ahorro españolas.Grupos de interés; Eficiencia; Pesos; Gobierno de la empresa; Cajas de ahorro;

Evaluación de la eficiencia con múltiples fines : una aplicación a las cajas de ahorro

En este trabajo elaboramos un índice de la eficiencia global alcanzada por una organización cuando su actuación se dirige a la maximización de una misión con fines diversos que pueden responder a diferentes colectivos. La ventaja de este índice es que permite la agregación de fines expresados en unidades heterogéneas y sobre los que no existen precios de mercado. Nuestra propuesta también requiere menos información sobre la tecnología subyacente que transforma los factores productivos. La técnica utilizada asigna pesos a cada uno de los fines, definiendo así su importancia dentro de la misión, y ofrece también la posibilidad de restringir los valores de dichos pesos, pudiendo elaborarse un nuevo índice que incorpore las preferencias del legislador. La metodología propuesta se aplica a las cajas de ahorro españolas.Publicad

Information sharing and lending market competition under strong adverse selection

In a relatively recent paper, Gehrig and Stenbacka (Eur Econ Rev 51, 77- 99, 2007) show that information sharing increases banks' profits to the detriment of creditworthy entrepreneurs in a model of a banking duopoly with switching costs and poaching. They restrict their analysis to the case in which adverse selection is not too strong.We analyze the complementary case and show that, when the economy suffers from strong adverse selection, information sharing still increases banks' profits, but it may or may not hurt talented entrepreneurs

Multiple goals and ownership structure : effects on the performance of Spanish savings banks

Spanish savings banks (SBs) are financial institutions with a wide mission that includes different stakeholders’ goals. Profit maximization is only one among several goals, and the widespread use of cost or profit efficiency as the only comparative performance measure may prove to be insufficient in this context. To overcome this problem, we build an aggregate performance index for organizations with multiple goals. Furthermore, we show how the ownership structure of SBs influences their economic behavior in two basic ways: (1) the performance level and (2) their goal priorities. In particular, we distinguish two types of ownership structures in our application, namely, organizations controlled by Public Administrations and those controlled by insiders (i.e. managers and workers). Our results indicate that each type has different priorities and differ in their performance indexes. More specifically, the empirical analysis shows that insider-controlled SBs favor goals related to profit maximization and the universal access to financial services and, furthermore, they perform better. In contrast, contributing to regional development becomes the most favored goal when Public Administrations have a majority in the bank.Publicad

A main bank approach to financial contracting

This paper analyzes the costs and benefits of using a Main Bank (MB) as a financial provider. Several banks lend resources to a particular firm but only one monitors and remains responsible to other participants. These inside banks act as fund providers for the project, exchanging roles by the time other projects are considered. We show how, depending on firms quality and the banks skills to monitor, an MB-contract outperforms other arrangements. This type of financial relationship is particularly prominent in the Japanese marketplace, and in spite of recent setbacks, we believe sorne of its features have the potential to be implemented in other marketplaces

Corporate Governance, Ownership Structures and IT Investments. An Institutional approach.

The research aims to highlight the relationships of traditional and new ownership structures on information technology (IT) investments for firms listed on Iberoamerican stock markets after a global crisis. The study uses a neo-institutional economic framework to show the corporate governance’s changes through institutional logic of ownership structures as well as IT investments growth in Iberoamerica. A literature review considers the relevance of concentrated ownership, top foreign ownership and common ownership of new institutional investors. The research design is a non-experimental longitudinal study with an annual panel data from 2009 to 2015, using 2,156 firm-year observations listed in stock market of Chile, Colombia, Mexico, Peru (MILA) and Spain (IBEX). The findings show that IT investment growth is negatively affected by concentrated ownerships and top foreign ownership, this last as unexpected situation, while it is positively affected by the new institutional investors. The contribution is to expand this research topic as continuing and permanent discussion of academics on corporate governance closer to IT approach, and vice versa

Corporate governance and the Mondragón cooperatives

This paper builds upon recent advances in the corporate governance framework to extend and complement the economic literature on producer cooperatives. We argue that the problem of governance in a cooperative is twofold and consists in designing mechanisms and setting up institutions that (1) encourage workers to define a goal that maximizes workers’ welfare and (2) induce managers to pursue and internalize such a broad goal. When compared to capital-controlled firms, the agency problems become more complex and harder to solve in the cooperative framework. As empirical evidence of this problem and its corresponding solution, we illustrate the case of the Mondragón cooperatives, explaining in detail the incentive system and the control mechanisms now in place in this successful business group. The study of the governance architecture of Mondragón may help us to propose solutions to traditional problems of the cooperative firm and to reach a better understanding of both the governance of cooperatives and corporate governance in general.Publicad