The Effects of Corporate Governance on CAMEL Rating: Evidence from Taiwan's Banks
Date Issued
2014
Date
2014
Author(s)
Chen, Po-Yu
Abstract
2001 Enron Corporation was revealed that its reported financial condition was sustained substantially by an institutionalized, systematic, and creatively planned accounting fraud, known since as the Enron scandal. At the same time, many Taiwan’s companies were found to have accounting fraud. According to this, Taiwan’s government paid more attention to Corporate Governance of financial industry. This paper is trying to find the relation between Corporate Governance and CAMEL rating system, which is used to decide the performance of financial company, of Taiwan’s banks. The conclusion of this paper shows that (1) The Director Shareholding ratio, Director Collateralization ratio, Major shareholder Shareholding ratio, Juristic person Shareholding ratio, the amount of Independent Director have a positive correlation with Bank of International Settlement ratio. (2) The Director Shareholding ratio, Director Collateralization ratio, Major shareholder Shareholding ratio, the amount of Independent Director have a negative correlation with Non-performing Loans ratio. (3) The Director Collateralization ratio, Supervisor Shareholding ratio, Juristic person Shareholding ratio, the amount of Independent Director have a positive correlation with Operating Profit Margin, the Director Shareholding ratio has a negative correlation with Operating Profit Margin. (4) The Director Collateralization ratio, Supervisor Shareholding ratio, Juristic person Shareholding ratio, the amount of Independent Director have a positive correlation with Return On Assets. The Director Shareholding ratio, Major shareholder Shareholding ratio, have a negative correlation with Return On Assets. (5) The Director Collateralization ratio, Major shareholder Shareholding ratio, Shareholding ratio, the amount of Independent Director have a positive correlation with Current Ratio. The Supervisor Shareholding ratio has a negative correlation with Current Ratio.
Subjects
Corporate Governance
CAMEL rating
Bank
Ownership Structure
financial holding company
Type
thesis
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