On December 20th, Triinu Tapver, a PhD student at TalTech’s Department of Economics and Finance, defended her doctoral thesis, titled “Essays on Bank Governance and Mutual Fund Performance”. The thesis first sheds light on how the corporate governance structures of banks contribute to their sustainability reporting. Secondly, the thesis examines mutual fund performance. The thesis consists of three published articles:
The first publication, titled “CSR reporting in banks: does the composition of the board of directors matter?”, explores how the composition of the board of directors contributes to the corporate social responsibility (CSR) reporting and the quality of CSR disclosure of listed banks from around the world. Special attention is paid to controlling for the regulatory requirements on board composition and CSR reporting. The publication demonstrates that mandatory governance regulations forced banks to change the composition of their boards of directors and make them more diverse, which should promote their commitment to CSR activities. However, the results showed that the voluntary commitment to CSR by banks that increase their board diversity voluntarily is not substantially different from that of banks that are subject to board composition requirements. Disclosure of CSR reports, even if it is mandatory, is however more likely at banks where the roles of the CEO and the chair of the board are separated voluntarily and where there are more women on boards.
The second publication, titled “Banks’ CSR reporting – Do women have a say?”, concentrates specifically on the role of female representation on the boards of banks. The paper studies whether board gender quotas influence the association between female representation on boards and the CSR reporting of listed banks from around the world. The results suggest that the disclosure of CSR reports could be increased if gender quotas were introduced. Further, adding more women to boards than required by the quota could push banks toward greater CSR reporting in masculine countries but not in feminine countries. However, gender quotas might not automatically guarantee that a bank’s operations are sustainable. Poorer CSR performance could also occur if women are appointed to boards only to meet the quota and end up with insufficient say.
The third publication, titled “Luck and skill in the performance of global equity funds in Central and Eastern Europe”, examines the performance of individual global equity funds in Central and Eastern Europe (CEE) and separates the skill of their fund managers from luck. The paper uses cross-sectional bootstrap simulations. The results show that there are only a few truly skilful global equity funds in CEE, and most of the negative performance among the funds appeared to be due to poor skills, not bad luck. Even though there are some mutual fund managers in CEE who do possess skill, their skill might not be sufficient to cover their fund fees. The results of thereby indicate that mutual funds in CEE may charge excessively high fees for the abnormal performance they add. Overall, the paper provided evidence that market-tracking passive indexes are the most reliable choice for investors who want to maximise their risk-adjusted returns at the lowest possible cost.
Associate Professor Laivi Laidroo (primary supervisor), Associate Professor Karin Jõeveer (co-supervisor)
Professor Bert Scholtens (Faculty of Economics and Business, University of Groningen, Netherlands and School of Management, University of St Andrews, United Kingdom)
Associate Professor Rients Galema (School of Economics, Utrecht University, Netherlands)
The doctoral thesis is available here: LINK
This work has received funding from the Estonian Ministry of Education and Research, project “Efficiency in the Financial Sector in the Light of a Changing Regulatory Environment” under Grant No B57; from the European Regional Development Fund, Tallinn University of Technology ASTRA project, TTÜ Development Program 2016-2022 under project 2014-2020.4.01.16-0032; from the European Union’s Horizon 2020 Research and Innovation Programme under Grant Agreement No 952574; from the European Economic Area (EEA) Financial Mechanism 2014-2021 Baltic Research Program under project S-BMT-21-8 (LT08-2-LMT-K-01-073); and from the European Regional Development Fund, Dora Plus Programme under activity T1.1 and T1.2.