Table 10 Insider ownership and default...

Table 10

Insider ownership and default risk: the role of the main bank

	(1)	(2)	(3)	(4)	(5)	(6)
	Firms with main bank			Firms without main bank
	DD	DD	DD	DD	DD	DD
DIR	−0.007***			−0.008***
DIR	(−4.276)			(−6.194)
CEOIR		−0.011***			−0.014***
CEOIR		(−6.129)			(−6.605)
EMPIR			−0.011			−0.008
EMPIR			(−0.090)			(−1.484)
LNS	0.100***	0.098***	0.106***	0.206***	0.171***	0.219***
LNS	(9.558)	(9.414)	(10.320)	(18.965)	(13.388)	(20.642)
K/S	0.643***	0.646***	0.630***	0.816***	0.811***	0.837***
K/S	(10.811)	(10.854)	(10.570)	(15.263)	(13.252)	(15.674)
Y/S	6.477***	6.472***	6.401***	4.467***	4.189***	4.409***
Y/S	(22.981)	(22.977)	(22.672)	(20.788)	(17.455)	(20.505)
R&D/K	0.097**	0.092**	0.099**	0.011***	0.008*	0.011***
R&D/K	(2.368)	(2.252)	(2.421)	(2.810)	(1.886)	(2.816)
RDUM				1.186	1.355	1.233
RDUM				(1.513)	(1.198)	(1.570)
I/K	−0.333***	−0.319**	−0.382***	−0.058**	−0.062**	−0.062**
I/K	(−2.664)	(−2.554)	(−3.057)	(−2.188)	(−2.240)	(−2.305)
ROA	0.036***	0.036***	0.035***	0.027***	0.027***	0.026***
ROA	(10.858)	(10.920)	(10.569)	(11.875)	(10.542)	(11.248)
LEVERAGE	−5.926***	−5.913***	−5.951***	−5.469***	−5.330***	−5.531***
LEVERAGE	(−69.070)	(−68.945)	(−69.539)	(−62.525)	(−51.576)	(−63.610)
Age	−0.059***	−0.063***	−0.034*	0.081***	0.141***	0.117***
Age	(−2.886)	(−3.174)	(−1.761)	(3.997)	(5.378)	(6.028)
Constant	3.784***	3.822***	3.664***	1.273	1.273	0.953
Constant	(30.917)	(32.351)	(31.648)	(1.599)	(1.117)	(1.199)
Observations	19,358	19,358	19,362	16,754	12,249	16,785
R-squared	0.580	0.580	0.580	0.543	0.559	0.541
Firm fixed effect	Yes	Yes	Yes	Yes	Yes	Yes
Year effects	Yes	Yes	Yes	Yes	Yes	Yes
χ²	29.34	19.28	26.85
Prob > χ²	0.000	0.000	0.000

	(1)	(2)	(3)	(4)	(5)	(6)
	Firms with main bank			Firms without main bank
	DD	DD	DD	DD	DD	DD
DIR	−0.007***			−0.008***
DIR	(−4.276)			(−6.194)
CEOIR		−0.011***			−0.014***
CEOIR		(−6.129)			(−6.605)
EMPIR			−0.011			−0.008
EMPIR			(−0.090)			(−1.484)
LNS	0.100***	0.098***	0.106***	0.206***	0.171***	0.219***
LNS	(9.558)	(9.414)	(10.320)	(18.965)	(13.388)	(20.642)
K/S	0.643***	0.646***	0.630***	0.816***	0.811***	0.837***
K/S	(10.811)	(10.854)	(10.570)	(15.263)	(13.252)	(15.674)
Y/S	6.477***	6.472***	6.401***	4.467***	4.189***	4.409***
Y/S	(22.981)	(22.977)	(22.672)	(20.788)	(17.455)	(20.505)
R&D/K	0.097**	0.092**	0.099**	0.011***	0.008*	0.011***
R&D/K	(2.368)	(2.252)	(2.421)	(2.810)	(1.886)	(2.816)
RDUM				1.186	1.355	1.233
RDUM				(1.513)	(1.198)	(1.570)
I/K	−0.333***	−0.319**	−0.382***	−0.058**	−0.062**	−0.062**
I/K	(−2.664)	(−2.554)	(−3.057)	(−2.188)	(−2.240)	(−2.305)
ROA	0.036***	0.036***	0.035***	0.027***	0.027***	0.026***
ROA	(10.858)	(10.920)	(10.569)	(11.875)	(10.542)	(11.248)
LEVERAGE	−5.926***	−5.913***	−5.951***	−5.469***	−5.330***	−5.531***
LEVERAGE	(−69.070)	(−68.945)	(−69.539)	(−62.525)	(−51.576)	(−63.610)
Age	−0.059***	−0.063***	−0.034*	0.081***	0.141***	0.117***
Age	(−2.886)	(−3.174)	(−1.761)	(3.997)	(5.378)	(6.028)
Constant	3.784***	3.822***	3.664***	1.273	1.273	0.953
Constant	(30.917)	(32.351)	(31.648)	(1.599)	(1.117)	(1.199)
Observations	19,358	19,358	19,362	16,754	12,249	16,785
R-squared	0.580	0.580	0.580	0.543	0.559	0.541
Firm fixed effect	Yes	Yes	Yes	Yes	Yes	Yes
Year effects	Yes	Yes	Yes	Yes	Yes	Yes
χ²	29.34	19.28	26.85
Prob > χ²	0.000	0.000	0.000

Note(s): Table 10 reports estimates from regression results to analyze if the presence of main bank system moderates the relationship between insider ownership and firm default risk. Firms with main bank portray strong external governance and firms without main bank portray weak external governance. Columns 1–3 show results for firms with main bank ties and columns 4–6 show results for firms with no main bank ties. T-statistics are in parentheses. Definitions of all variables are provided in Appendix. Superscripts ***, ** and * denote statistical significance at 1, 5 and 10% level, respectively

Source(s): Table created by the authors

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