Proceedings of World Business, Finance and Management Conference

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Proceedings of World Business, Finance and Management Conference
14 - 15 December 2015, Rendezvous Grand Hotel, Auckland, New Zealand
ISBN: 978-1-922069-91-7
Culture, Bank Supervision, and Investor Protection: Evidence
from Financial Crisis
Mahmud Hossain*, Feras Salama and Santanu Mitra
This study examines whether two important behavioral attributes, religiosity and linguistic
distance (from the English language), are considered by the investors to value bank
equity prices during the time of a global financial crisis. We further test whether the level
of bank supervision and investor protection could nullify the equity pricing consequence
of these two behavioral attributes, based on the premise that in the presence of strong
supervision and investor protection, behavioral factors’ influence on stock price could be
trivial. Using a comprehensive sample of global banks, we observe that both religiosity
and linguistics are considered by investors to value bank equity during a financial crisis,
and neither supervision nor investor protection could impact the equity valuation of
religiosity and linguistic distance. We perform these tests separately for developed and
emerging countries. While religiosity is positively priced in bank equity stocks of both sets
of countries, linguistic distance has a positive equity pricing consequence in developed
but not in emerging economies. Finally, we observe that bank supervision and investor
protectionism could not nullify the equity pricing of any of the two behavioral attributes in
either developed or emerging nations.
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* Corresponding Author
Mahmud Hossain, Assistant Professor of Accounting, College of Business and Management
American University of Sharjah, P.O. Box 26666, Sharjah, United Arab Emirates,
E-mail: [email protected]
Feras Salama, Assistant Professor of Accounting, College of Business and Management,
American University of Sharjah, P.O. Box 26666, Sharjah, United Arab Emirates,
Email: [email protected]
Santanu Mitra, Associate Professor, Board of Visitors Faculty Fellow, Department of Accounting,
School of Business Administration, Wayne State University, Detroit, MI 48202,
E-mail: [email protected]
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