COMMERCIAL BANK DIRECTOR/OFFICER LIABILITY EXPOSURE AND THE AGENCY ISSUE
Bill Scroggins Jr.
(Associate Professor of Finance, Jacksonville State University)
William Fielding
(Professor of Economics, Jacksonville State University)
Louise Clark
(Professor of Statistics, Jacksonville State University)
148
Abstract
This paper presents the results of a survey of 1000 U.S. Commercial Banks concerning their perception of and reaction to liability exposure. Also, the paper presents an application of the Modigliani‐Miller Capital Structure Model to illustrate the process by which liability exposure subjects the bank to financial leverage through lawsuits which may result in a dramatic reduction in shareholder wealth.
Citation
Scroggins, B., Fielding, W. and Clark, L. (1995), "COMMERCIAL BANK DIRECTOR/OFFICER LIABILITY EXPOSURE AND THE AGENCY ISSUE", Studies in Economics and Finance, Vol. 16 No. 1, pp. 46-63. https://doi.org/10.1108/eb028717
Publisher
:MCB UP Ltd
Copyright © 1995, MCB UP Limited