Institutional investors’ horizons and bank transparency

Mamiza Haq, Shams Pathan, Carlos Fernandez Mendez, Gerald J. Lobo

Research output: Contribution to journalArticlepeer-review


We examine the relation between institutional investors’ horizons and bank transparency. The novelty of this research is to consider three important aspects of transparency: disclosure quality, private information gathering and auditor fees. We find strong evidence indicating that banks dominated by long-term (short-term [ST]) institutional shareholders exhibit higher (lower) levels of disclosure quality. However, there is no evidence that investor horizon has a differential effect on private information gathering and audit pricing. The study employs alternative proxies and estimations such as two-stage least squares and propensity score matching to address endogeneity. We also document that banks with higher ST institutional shareholding are associated with lower crash risk. These findings are particularly significant because poor bank transparency has been identified as a contributing factor to the 2007–2009 financial crisis.
Original languageEnglish
Number of pages30
JournalJournal of Business Finance and Accounting
Early online date24 Sep 2023
Publication statusE-pub ahead of print - 24 Sep 2023

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