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Title: Managerial risk-taking behavior : a too-big-to-fail story
Authors: Zardkoohi, Asghar
Kang, Eugene Soon Lee
Fraser, Donald
Cannella, Albert A.
Keywords: Business::Law
Issue Date: 2016
Source: Zardkoohi, A., Kang, E., Fraser, D., & Cannella, A. A. (2018). Managerial risk-taking behavior : a too-big-to-fail story. Journal of Business Ethics, 149(1), 221-223. doi:10.1007/s10551-016-3133-7
Journal: Journal of Business Ethics
Abstract: We examine the implications of the US government’s too-big-to-fail (TBTF) policy as it has been applied to banks. Using alternative measures of risk, we compare the risk-taking behavior of 11 TBTF banks, identified by the Comptroller of the Currency in 1984, to a number of non-TBTF banks. We provide both theory and new empirical evidence to support our argument that the TBTF policy leads management to significantly increase risk-taking, with no corresponding increase in performance. While prior studies have considered the effects of the TBTF policy on limited, but risk-related aspects of bank behavior, such as the cost of funds, our study provides direct evidence about the risk-taking behavior associated with the TBTF policy. Our study has important implications for the current political debate regarding the too-big-to-fail policy.
ISSN: 0167-4544
DOI: 10.1007/s10551-016-3133-7
Schools: Nanyang Business School 
Rights: © 2016 Springer Science+Business Media Dordrecht. All rights reserved.
Fulltext Permission: none
Fulltext Availability: No Fulltext
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