This paper uses bank holding company financial report data to analyze agency behavior differences between public (listed on a stock exchange) and private banks. We provide evidence consistent with higher perquisite consumption and risk aversion among managers at public banks. We find weak evidence of greater value-destroying acquisitions by public bank managers. We provide strong evidence that managers of banks with large free cash flows make loans of average risk for below-market interest rates and experience higher loan losses, consistent with slacking through lack of proper risk assessment and loan monitoring.
