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Executives as Agents: Expatriate managers in subsidiaries of multinational banks. ACES Working Papers, June 2012

Bogaard, Hein and Sonkova, Marketa (2012) Executives as Agents: Expatriate managers in subsidiaries of multinational banks. ACES Working Papers, June 2012. [Working Paper]

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    Abstract

    Performance and behavior between domestic and foreign-owned banks are grounded in assumptions about the ability of parent banks to provide subsidiaries with capital and knowledge and to manage asymmetric information and agency problems in the parent-subsidiary relationship. We complement research on internal capital markets and investigate how foreign owners of banks in emerging markets use their power to appoint executives at their subsidiaries to manage agency problems in the parent-subsidiary relationship. We find that perceived corruption and poor ICRG risk scores are associated with the appointment of parent-country executives as supervisors on behalf of the foreign owner. By contrast, a focus on retail clients, the absence of organizational routines and poor creditor rights are associated with the appointment of host-country executives. These bank and country characteristics create agency problems within the subsidiary, but not necessarily between the subsidiary and its parent. As such, they create a need for host-country executives’ superior knowledge of local markets and staff rather than for the supervisory role of parent-country executives.

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    Item Type: Working Paper
    Additional Information: First draft completed in October 2011.
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > business/private economic activity
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > American Consortium on European Union Studies > ACES Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 15 Jan 2015 10:48
    Number of Pages: 35
    Last Modified: 15 Jan 2015 10:48
    URI: http://aei.pitt.edu/id/eprint/59196

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