The Share Price and Trading Volume Reactions of U.S.-Listed Foreign Banks to the Financial Services Modernization Act of 1999

Research in Finance

ISBN: 978-0-7623-1345-7, eISBN: 978-1-84950-441-6

ISSN: 0196-3821

Publication date: 11 December 2006

Abstract

Using a generalized least squares (GLS) portfolio approach, Corrado's rank statistic, and confirmed by the traditional market model approach, we find significant negative share price reactions to certain legislative announcements surrounding the passage of the GLB. Trading volume reactions corroborate the significant share price responses. In general, our results indicate that investors in foreign banks reacted negatively to key legislative action. In a cross-sectional analysis, younger, higher-risk foreign banks with less concentrated ownership and more subordinated debt from countries with higher quality accounting standards appear to have more positive (or less negative) share price reactions.

Citation

Pacini, C., Hillison, W. and Hobbs, B. (2006), "The Share Price and Trading Volume Reactions of U.S.-Listed Foreign Banks to the Financial Services Modernization Act of 1999", Chen, A. (Ed.) Research in Finance (Research in Finance, Vol. 23), Emerald Group Publishing Limited, Bingley, pp. 127-159. https://doi.org/10.1016/S0196-3821(06)23005-3

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Emerald Group Publishing Limited

Copyright © 2006, Emerald Group Publishing Limited

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