In cross-country setting, the first study conducted by Becalli et al. (2006) found a positive
relationship between cost efficieny and bank stock performance using the sample of the five principal
EU banking sectors (i.e. France, Italy, Germany, Spain and UK). Liadaki and Gaganis (2010) extended
the study by investigating whether the performance of 15 EU listed banks is related to their efficiency.
They found a significant positive relationship between change in profit efficieny and bank stock
performance but no relationship between change in cost efficiency and stock returns. In a similar
study, Ioannidis et al. (2008) provide evidence from a sample across developing and developed Asian
and Latin American countries. They found a positive and robust relationship between profit and cost
efficiency changes and stock performance.