Search

PurposeLegislators legislate, but how feasible and effective the implementation and enforcement of these laws are and how congruent with the countries characteristics, is under doubt. The paper seeks to argue that the Greek law on corporate governance (CG) had no effect on the fundamental elements of the corporate environment.Design/methodology/approachSeven hypotheses are tested using three different econometric methodologies (panel data, probit, and ordinal probit regression).FindingsThe paper pinpoints the legal disarrays and their impact on the firm and argues that there is a need for a new set of principles and laws that focus on the real issues of CG rather than the size, structure and leadership of the administrating bodies or the disclosure mechanisms.Research limitations/implicationsThe data used have been collected from the annual reports and not from questionnaires. Furthermore, there is no methodology to integrate all seven models to a structured or nested model.Practical implicationsThe study provides evidence that there is a need for a different set of provisions than the ones in the Anglo‐Saxon countries.Originality/valueThe paper uses a variety of methodologies and tests seven hypotheses. It takes a more holistic approach.

The crises of 2002 and 2008 have raised the issue of banking sector’s ability to absorb the effects of the crises. The inactivity of banks may be the result of a number of events, such as merger & acquisition (M&A), liquidation, default-bankruptcy, etc. Bankruptcy has been found to be a phenomenon that doesn’t happen often. On the contrary, M&As and liquidation are the main inactivity phenomena.The paper will address the issue of inactivity and will try to detect its causes using econometric models. Six groups of indicators are examined: performance, size, ownership, corporate governance, capital adequacy or capital structure and loan growth. Three econometric methods (Probit, Logit, OLS) have been used to create a system that predicts inactivity.The results of the econometric models show that from the six groups of indicators, four have been found to be statistically important (performance, size, ownership, corporate governance). Two have a negative impact (ownership, corporate governance) on the probability of inactivity and two positive (performance, size). This finding is consistent with the theory. The paper’s value and innovation is that it has given a systemic approach to find indicators of inactivity and it has excluded two groups of indicators as non-statistically important (capital adequacy or capital structure and growth).

During the last decades Europe has started a policy of convergence. The establishment of European Central Bank and the Euro as a common currency are two critical time and crucial points of the convergence effort. The crises of 2002 and 2008 have raised the issue of stability, status and structure of the European banking system. Ranking agencies have been used to evaluate the financial and governance adequacy of banks. The paper attempts to find the factors that determine the ranking system of banks in Europe and it’s capability of predict good performance in governance and performance.The methodology presented in this paper consists of two main blocks of research. The first block of research uses a constructed binary variable for Fitch’s ranking for Europe’s banks. The construction of the variable is based on the value of evaluation. The best value (AAA has value 24, A- has value 18 and B- has value 9 and so on. Good rank value (Fitch binary variable = 1) is considered to be above A- (value 18) and bad ranking below that number (Fitch binary variable = 0). Three econometric methods (Probit, Logit, OLS) have been used to create a system that predicts the good value of Fitch rank.The second block uses the average numerical value of Fitch ranking system for every bank calculated previously in order to create econometric models that can explain and clarify the factors that affect the ranking system. Three econometric methods (Ordinary Least Squares, Least Absolute Deviations, and Robust Regression) have been used to create a system that predicts the value of Fitch rank. The independent variables used in both groups of research can be categorized into seven groups of indicators: performance, size, ownership, corporate governance, capital adequacy or capital structure, locality-country ranking, and loan growth. Each group has more that on variable. The data used for the empirical analysis cover the period from 2004 to 2011, is focused on the twenty seven (27) European Union countries and only commercial and cooperative banks. The total number of banks, initially, collected from Bankscope were 4.573. After the analysis of outliers the sample was reduced to 4.536 banks (2.873 active and 1.663 inactive).The final sample is comprised only from data of active banks (in 2012). The initial data were filtered even more, new ratios were calculated and only major banks have been used as sample. The statistical results show that the rating system and especially Fitch’s ratings are determined by four main factors (performance, locality-country risk, governance and capital adequacy). The paper’s value and innovation is that it has given a systemic approach to find indicators of ranking process and it has excluded four groups of indicators as non-statistically important (ownership, size, capital structure and growth). Although some of the factors were expected to be either significant or having little effect (e.g. performance-capital adequacy, size), others are unexpected (e.g. governance, capital structure). The results show a large dependence of bank ranking to country ranking and so the macroeconomic environment is largely the most significant factor.

The crises of 2002 and 2008 have raised the issue of banking sector’s ranking system efficiency. The credit rating agencies (CRAs) are crucial for the modern financial market. The impact that the ratings have is indisputable. This paper is seeking to find the factors that affect the ratings and to create a prediction mechanism. The originality of the paper is based on the fact that it utilizes a number of different variables (ownership status, corporate governance, etc.), and the hypothesis is innovative because it addresses the issue of divergence–convergence of the European banking sector and its respective ratings. In order to do that, all ranking evaluations have been matched with a numerical value (i.e., AAA has value 24, A- has value 18, and B- has value 9). A good grade is considered to be above A- (value 18) and a bad grade below that number. Seven groups of indicators are examined: performance, size, ownership, corporate governance, capital adequacy or capital structure, sovereign–country ranking, and loan growth. Three econometric methods (probit, logit, and OLS) have been used to create a system that predicts the rating grade. The independent variable is binary (good grade = 1/bad grade = 0). Inactive banks have been excluded from the sample. This paper provides a model for predicting the factors that affect the grade of the bank rating. Many of the factors, which other studies have pointed out, are found to be statistically important in our models, too. This paper contributes to the literature by establishing a unique framework for the European banks and identifying the factors that affect the rating grade by giving an answer to the issue of an isomorphic banking sector in Europe. It shows that there are significant differences among the various geographical regions [variables cgsys, ns, European countries with major economic problems or those under stress (Portugal, Ireland, Spain, and Greece)].

Legal initiatives have a significant impact on the inner and outer corporate environment. Recent scandals and developments have triggered a wave of regulative and voluntary initiatives to improve corporate governance (CG) quality. The legislators legislate, but how feasible, effective is the implementation of these laws and how congruent with the countries characteristics is under doubt. The paper argues that the Greek Law on Corporate Governance had no effect on the fundamental elements of the corporate environment. Seven hypotheses are test using three different econometric methodologies (Panel data, Probit and Ordinal Probit Regression) are used. The legalistic approach drives the corporation to a mechanistic compliance and hence looses the freedom to make innovative decisions (Donaldson, 2003) or create costs that do not have a positive impact on financial performance, organizational stability, etc. The paper pinpoints the legal disarrays and their impact on the firm and argues that there is a need for a new set of principles and laws that focus on the real issues of corporate governance rather than the size, structure and leadership of the administrating bodies or the disclosure mechanisms.

Purpose – M&A differences are based on three levels: preconditions, payment methods and motives-drivers. The paper’s purpose is to determine the motives, preconditions and methods of M&As in Greece and to compare them with the ones that are recorded in the studies for the Anglo-Saxon countries. Design/methodology/approach – The data used are collected from annual reports. A model was constructed using Probit regression methodology. The paper focused on the decision to adopt the M&A strategy (of the M&A strategy adoption). Findings – The paper argues that the M&A activity in Greece wasn’t the result of a convergence trend (a shift in the fundamental elements of the Greek business environment), but rather an extraordinary event. The preconditions and motives that are reported for the Anglo-Saxon countries are either none existing or weak in comparison in the case of Greece. In Anglo-Saxon countries M&As changed the business and organizational model, whereas in Greece the fundamental characteristics remained the same. Research limitations/implications – Data have been collected from the annual reports of the 60 biggest in capitalization firms in the Greek Stock Exchange. Practical implications – The fact that there are different businesses and organizational models across Europe is a factor that must be taken into account in designing and implementing policies and regulations that promote the idea of a common market with complete freedom of movement and the same rules and regulations. Originality/value – This is the first paper that uses Probit methodology to study M&As in Greece and complements a growing body of literature studying the M&A phenomenon in Europe.