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Bank board structure and performance: Evidence for large bank holding companies

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Author Info

  • Adams, Renée B.
  • Mehran, Hamid

Abstract

The subprime crisis highlights how little we know about bank governance. This paper addresses a long-standing gap in the literature by analyzing the relationship between board governance and performance using a sample of banking firm data that spans 34years. We find that board independence is not related to performance, as measured by a proxy for Tobin’s Q. However, board size is positively related to performance. Our results are not driven by M&A activity. But, we provide new evidence that increases in board size due to additions of directors with subsidiary directorships may add value as BHC complexity increases. We conclude that governance regulation should take unique features of bank governance into account.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Intermediation.

Volume (Year): 21 (2012)
Issue (Month): 2 ()
Pages: 243-267

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Handle: RePEc:eee:jfinin:v:21:y:2012:i:2:p:243-267

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Web page: http://www.elsevier.com/locate/inca/622875

Related research

Keywords: Corporate Governance; Board structure; Banking industry; Holding company; Complexity;

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References

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Citations

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Cited by:
  1. Liang, Qi & Xu, Pisun & Jiraporn, Pornsit, 2013. "Board characteristics and Chinese bank performance," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2953-2968.
  2. Pathan, Shams & Faff, Robert, 2013. "Does board structure in banks really affect their performance?," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1573-1589.
  3. Li, Li & Song, Frank M., 2013. "Do bank regulations affect board independence? A cross-country analysis," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2714-2732.

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