Uneven regulatory playing field and bank transparency abroad

• 成果类型: Article
• 署名作者: Chen, Tai-Yuan; Chen, Yi-Chun; Hung, Mingyi
• 署名单位: Hong Kong University of Science & Technology; City University of Hong Kong
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/s41267-021-00491-6
• 发表日期: 2022
• 页码: 379-404
• 关键词: transparency within and among MNEs and national states; Agency theory; multinational corporations (MNCs) and enterprises (MNEs); Headquarters-subsidiary roles and relations

摘要

Motivated by international business research on institutional arbitrage and headquarters-subsidiary relationships, we examine the effect of regulatory distance on multinational banks' (MNBs) reporting transparency abroad. Using an international sample of foreign subsidiary banks in 46 host countries from 47 home countries, we find that bank transparency declines when the home countries have tighter activity restrictions than the host countries. We bolster the causal inference using difference-in-differences designs that take advantage of banking reforms and cross-border bank acquisitions. We also find that the result is more pronounced when parent banks have lower capital ratios or when host countries have weaker supervisory power, suggesting that parent banks use opaque reporting to conceal risk-taking abroad. Further analysis finds that less transparent subsidiaries are more likely to fail during financial crises. Overall, our findings suggest that regulatory distance creates negative externalities for bank transparency and stability abroad.