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In the second issue of the journal Risk Governance and Control: Financial Markets & Institutions in 2021 contributions are published that studied investigating the cross-market linkages and papers related to human capital as a critical component in the knowledge economy

The shareholder is the basis of the corporate idea and framework. Corporate governance protects the rights of shareholders. But not all shareholders have the same power, control or ability to exert their responsibilities and rights. The plethora of legal, regulatory and statutory frameworks and initiatives that are in place to establish a balance of power and control within and beyond the formal organizational pyramid, do not take into account the power and the complexity of relations, alliances and strategies among shareholders, shareholders and managers or shareholders and other stakeholders. Furthermore, main corporate governance theories more or less ignore minority shareholders. They are considered as free riders, useful idiots or just supplemental capital to achieve the goals of the more organized or more powerful shareholders or managers. Their position and bargaining depend on ownership concentration and legal protection. Ownership domination and control are the borderlines of the corporate governance problems especially in Continental Europe corporate governance system. In Continental Europe corporate governance system, the issues or problems that are reported for the Anglo-Saxon system are different: asymmetry of information vs asymmetry of power and control, moral hazard vs moral control, adverse selection vs family loyalty, differences in motives (alignment of interests vs control entrenchment). The paper will address these differences and will argue that best practices as an easy way to uphold pretenses and the “comply or explain” in these circumstances leads to non-compliance and no explanations. Finally, the paper will try to answer the question: Who wants to be a minority shareholder in a corporation that doesn’t respect the rights of the individual shareholder or it is dominated completely? The consequences of the fallout or failure of corporate governance in Continental Europe system countries will be shown using the Folli Follie case in Greece. As a conclusion the paper argues that a new framework of corporate governance is needed for countries where ownership concentration is high and legal protection of minority shareholders is poor.

Financial performance as a phenomenon in the European banking sector is an issue of a wide debate. The paper is seeking to detect the variables that have an impact on performance. Ratios and stratification variables are used in panel data regressions and the time period of the study is from 2004 to 2013. The results show that performance (ROAA) is dependent on four categories of ratios (Asset quality, Capital ratios/risk and solvency ratios, Operations ratios, Liquidity ratios). Corporate governance system and the geographic location (political and macroeconomic factors) of the bank seem to effect significantly the factors that have an impact on performance.

Many scholars have linked Corporate Governance (CG) and performance or CG, capital structure of banks or market structure. The decision to use the capital market or debt in order to obtain the necessary capital to finance firms’ operations is a critical factor for the formulation of corporate environment, because it contributes to the ownership concentration or diffusion and to corporate risk exposure level. The paper’s goal is to link all these three dimensions and to address the issue of whether performance and capital structure are the decisive factors of good corporate governance or vice versa and whether these dimensions are the drivers of banks’ financial health, strategic robustness and survival effectiveness. Furthermore, the paper is seeking to detect the differences (if any) among banking systems across Europe. To do that a double sample is selected (covering the period from 2004 to 2013). The first sample is comprised by European banks that merged. The second sample is comprised by European banks that survived the last merger & acquisition wave and the systemic shock of the double crises of 2002 and 2008. A combined ratio of performance (ROAA or ROEA) and debt to equity (DE or debt aggravation) is used to determine if there is a connection between capital structure and CG quality of banks. Panel data methodology is used. The econometric results show that there are no significant differences between the strata that are used for this research. There is no common factor or driver between the banking systems of Europe. This is an indication that the convergence theory of corporate governance systems is yet confirmed

Objectives The paper’s first goal is to track the behavior, financial structure and corporate governance schemes of the European banks before, during and after the crises of 2001 and 2008, the regulatory initiatives that followed. The second goal is to determine the status of the sector in Europe and to clarify if there is a convergence trend. Data and Methods The data used for the empirical analysis cover the period from 2005 to 2014, is focused on the twenty-seven (27) European Union countries. The data were collected from Bankscope and the initial sample was 8.115 individual banks. The data collected were financial, board of directors, ratings (banks and country), investment ratios, etc. The variables used are categorized into six groups of indicators or dimension: ratings (country and bank), size, ownership, corporate governance, capital adequacy or capital structure and loan growth. Since this is the first approach of a large sample and number of variables, the paper’s methodology is simple (descriptive statistics, cross-tabulation, mean and variance differences, etc.). Results The results show that the European banking sector has taken two major shocks and these shocks have left their mark financially, structurally and on their governance mechanisms. Major changes have taken place, but these changes don’t seem to re-enforce any convergence trend. Conclusions The stability of the sector is based on structural elements (competition, capital structure, regulation, etc.) and its performance. The results also show that the European banking sector is not homogenized. There are significant differences in size, spatial distribution, performance, financial structure, etc.

Financial performance as a phenomenon in the banking sector is an issue of a wide debate. The paper is seeking to detect the variables that have an impact on performance. There are two ways that the paper is going to achieve its goal. The first is to find the statistical important variables – ratios and the second the use of stratification (corporate governance system and geographical location as an indication of the political and economic factors) variables that may diverge the behavior and hence the performance of banks across Europe. The data used for the empirical analysis cover the period from 2004 to 2013, is focused on the twenty-seven (27) European Union countries. The data were collected from Bankscope and the initial sample was 8.115 individual banks. The final sample (commercial and cooperative banks) is comprised from 2.721 to 3.081 (dependent on the availability of data for every ratio) individual cases. The data collected were mainly financial ratios and some stratifying variables (corporate governance system, north-south) and panel data regressions using stratifying variables were used. The results show that performance (roaa) is dependent on the other four categories of ratios (Asset quality, Capital ratios/risk and solvency ratios, Operations ratios, Liquidity ratios), the interesting part is which of them are found to be statistical important. Financial performance of banks is based on factors that are specific to the sector. Bad debt handling, asset quality, operational costs, finding other sources of income, interbank liquidity are the most important factors that affect performance. Corporate governance system and the geographic location (political and macroeconomic factors) of the bank seem to effect significantly the factors that have an impact on performance. Banks with an Anglo-Saxon corporate governance system and banks that are in north Europe present greater variance of performance and hence they seem to be less entrenched – protected from markets.

The chapter explores the relation among sovereign debt ratings, individual bank ratings and bank financial status. Credit Rating Agencies (CRA) are crucial to the function of financial markets. Two main blocks of models have been designed to investigate the above relations. The first block uses a constructed binary variable for Fitch’s ranking of European banks. The second block tries to identify the relation between financial performance and ratings. The data used for the empirical analysis, covering the period from 2004 to 2011, focus on the commercial banks of the 27 European Union countries. The statistical results show the close relation among sovereign debt, bank ratings and performance. The statistical importance of this relation is an indicator that external—exogenous factors (CRA) can play a significant role in formulating the economic environment, especially in times of crisis.

The goal of the paper is to detect the factors that affect financial performance of the European banks and the cross – sectional differences that may exist. The European banking sector is interesting due to its special characteristics and structure. The stability of the sector is based on structural elements (competition, capital structure, regulation, etc.) and its performance. The paper addresses the issue of the banking sector performance using two different econometric approaches. In both blocks of research ROA is used ROA as a performance index for Europe’s banks. The first approach has been realized by using four econometric methods [LAD (least absolute deviations), RREG (robust regression), ordinary least squares (OLS) and Quantile regressions] and the second approach is panel data regressions (Fixed and Random Effects) and tries to find if there are differences among different panels of European banks (PIGS-not PIGS, North-South, Entity type, Corporate governance system). The independent variables used in both groups of research can be categorized into six groups of indicators: ratings (country and bank), size, ownership, corporate governance, capital adequacy or capital structure and loan growth. The data used for the empirical analysis cover the period from 2004 to 2011, is focused on the twenty seven (27) European Union countries. The statistical results show that performance of banks in Europe is dependent on predictable factors and on factors like the credit ratings. The results also show that the European banking sector is not homogenized. There are significant differences in size, spatial distribution, performance, financial structure, etc. This results are important because as performance is not homogenized and the factors that determine performance have different weight in each subsystem, the European banking system is not isomorphic. Hence, each subsystem must have a different set of rules and strategies to enhance performance. The results are especially important for policy makers and explaining the events of the recent history.