In corporate governance research, more specifically studying ownership structure of banks, usually unconsolidated financial statement data is used. What is the explanation of taking unconsolidated figures while using unconsolidated data is a problem when there are banks in the sample belonging to the same banking group. Is it the case?
That's interesting. From the point of view of accounting there is really no reason to use unconsolidated data. Perhaps only when looking at the entity from the perspective of the registrar court, divident payments, regulatory capital and such. I would not use this as a source for performance or risk information.
In my opinion, this is disirable because the goals is to capture the effect of ownership structure on profit or any other form performance index. In Brazil, we usually use the consolidated data, but it´s a interesting question to evaluate.
As per my experience consolidated data includes other non-banking subsidiaries own by bank too. Therefore if you are studying only bank then unconsolidated data is bank's actual data.
Unconsolidated financial statement are richer with data and information then the consolidated. When investigating whether corporate governance principles have been upheld or been unimplemented.
Corporate governance is purely on the activities of the individual entity that makes up the group. therefore, to be able to have a clear picture of what is happening; unconsolidated financial statement is in a better position to reveal what is actually happening. In the same vein, if the activities of the holding company is not similar to the extent that consolidated financial statement can not be prepared, the best thing is to use the information from unconsolidated financial statement.