臺大管理論叢 NTU Management Review VOL.30 NO.2

185 NTU Management Review Vol. 30 No. 2 Aug. 2020 directors tend to have less financial statement frauds, resulting in positive outcomes (Beasley, 1996; Klein, 2002). The higher the BDMGER , the less independent the board might be. Next, the characteristics of the share ownership of the banks by shares held by directors on the board and managers ( BDHD and MGERHD ), the deviation between controlling seats and controlling shares ( MODEV ), and shares pledged by the directors in the board ( BDPLEDGE ) are measured. Separation of ownership and control rights incur agency costs (Jensen and Meckling, 1976). Thus, firm value or performance can be enhanced as management or board ownership increases (e.g., Weisbach, 1988; Mehran, 1995; Bhagat and Bolton, 2008). Nevertheless, Morck, Shleifer, and Vishny (1988) report a nonlinear relationship between firm value and management ownership. As for BDPLEDGE , Chiou, Hsiung, and Kao (2002) document that firms with a higher proportion of shares pledged by the directors tend to exhibit poorer operating performance and financial distress. Moreover, this study controls the shares held by blockholders or institutional investors ( BLOCKHD and LEGALHD ). Previous studies find that blockholder ownership improves corporate governance effectiveness (e.g., Berle and Means, 1932; Shivdasani, 1993; Kaplan and Minton, 1994). Finally, GOVHD is a dummy variable indicating whether the bank’s shares are owned by the government (Sapienza, 2004; Iannotta, Nocera, and Sironi, 2013; Onali, Galiakhmetova, Molyneux, and Torluccio, 2016). Model (1) is clustered by years. By performing model (1) this study calculates the inverse Mills ratio ( IMR ) for bank i, which will be used in the second stage. In the second stage, Model (2) is used to examine how the ICW disclosures are related to the market value of equity. The Ohlson model is extensively used to examine the effect of the factor of interest on value relevance (Chen, Chang, Wang, and Lee, 2005; Fan, Lin, and Chen, 2015; Liao and Lee, 2017). This study adopts the Ohlson model (1995) and further includes ICW disclosures and the inverse Mills ratio ( IMR ) calculated from model (1) in the following model. MV it = β 0 + β 1 ICW it + β 2 BV it + β 3 NI it + β 4 SIZE it + β 5 DIV_ASSET it + β 6 DIV_REV it + β 7 ZSCORE it + β 8 IMR it + ε it (2)