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Is corporate governance different for bank holding companies?

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Author Info
Renee Adams
Hamid Mehran

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Abstract

The authors analyze a range of corporate governance variables as they pertain to a sample of bank holding companies (BHCs) and manufacturing firms. They find that BHCs have larger boards and that the percentage of outside directors on these boards is significantly higher; also, BHC boards have more committees and meet slightly more frequently. Conversely, the proportion of CEO stock option pay to salary plus bonuses as well as the percentage and market value of direct equity holdings are smaller for bank holding companies. Furthermore, fewer institutions hold shares of BHCs relative to shares of manufacturing firms, and the institutions hold a smaller percentage of a BHC's equity. These observed differences in variables suggest that governance structures are industry-specific. The differences, the authors argue, might be due to differences in the investment opportunities of the firms in the two industries as well as to the presence of regulation in the banking industry.

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Publisher Info
Article provided by Federal Reserve Bank of New York in its journal Economic Policy Review.

Volume (Year): (2003)
Issue (Month): Apr ()
Pages: 123-142
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Handle: RePEc:fip:fednep:y:2003:i:apr:p:123-142:n:v.9no.1

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Related research
Keywords: Bank holding companies ; Bank management ; Corporate governance ; Manufactures;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Estrella, Arturo, 2004. "The cyclical behavior of optimal bank capital," Journal of Banking & Finance, Elsevier, vol. 28(6), pages 1469-1498, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Panagiotis Staikouras & Christos Staikouras & Maria-Eleni Agoraki, 2007. "The effect of board size and composition on European bank performance," European Journal of Law and Economics, Springer, vol. 23(1), pages 1-27, February. [Downloadable!] (restricted)
  2. Wim Fonteyne, 2007. "Cooperative Banks in Europe--Policy Issues," IMF Working Papers 07/159, International Monetary Fund. [Downloadable!]
  3. Köhler, Matthias, 2008. "Blockholdings and Corporate Governance in the EU Banking Sector," ZEW Discussion Papers 08-110, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  4. Frisell, Lars & Roszbach, Kasper & spagnolo, giancarlo, 2008. "Governing the Governors: A Clinical Study of Central Banks," Working Paper Series 221, Sveriges Riksbank (Central Bank of Sweden). [Downloadable!]
    Other versions:
  5. Polo, Andrea, 2007. "Corporate governance of banks: the current state of the debate," MPRA Paper 2325, University Library of Munich, Germany. [Downloadable!]
  6. Laeven, Luc & Levine, Ross, 2005. "Is There a Diversification Discount in Financial Conglomerates?," CEPR Discussion Papers 5121, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Khalid, Ahmed M. & Hanif , Muhammad N., 2005. "Corporate Governance for Banks in Pakistan: Recent Developments and Regional Comparisons," MPRA Paper 9255, University Library of Munich, Germany. [Downloadable!]
  8. Abhiman Das & Saibal Ghosh, 2004. "Corporate Governance in Banking System: An Empirical Investigation," Industrial Organization 0411004, EconWPA. [Downloadable!]
  9. David Yermack, 2006. "Board Members and Company Value," Financial Markets and Portfolio Management, Springer, vol. 20(1), pages 33-47, April. [Downloadable!] (restricted)
  10. Shams Pathan & Michael Skully & J. Wickramanayake, 2007. "Board Size, Independence and Performance: An Analysis of Thai Banks," Asia-Pacific Financial Markets, Springer, vol. 14(3), pages 211-227, September. [Downloadable!] (restricted)
  11. Andrea Beltratti & René M. Stulz, 2009. "Why Did Some Banks Perform Better During the Credit Crisis? A Cross-Country Study of the Impact of Governance and Regulation," NBER Working Papers 15180, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Nachane, D M & Ghosh, Saibal & Ray, Partha, 2005. "Bank nominee directors and corporate performance: micro evidence for India," MPRA Paper 2707, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  13. Renée B. Adams & Hamid Mehran, 2008. "Corporate performance, board structure, and their determinants in the banking industry," Staff Reports 330, Federal Reserve Bank of New York. [Downloadable!]
  14. Pablo de Andres Alonso & Eleuterio Vallelado Gonzalez, 2006. "Corporate governance in banking: The role of Board of Directors," Working Papers 200604, Department of Business Economics, Universitat Autonoma de Barcelona. [Downloadable!]
  15. Hamid Mehran & Joshua Rosenberg, 2007. "The effect of employee stock options on bank investment choice, borrowing, and capital," Staff Reports 305, Federal Reserve Bank of New York. [Downloadable!]
  16. Gregory Sierra & Eli Talmor & James Wallace, 2006. "An Examination of Multiple Governance Forces within Bank Holding Companies," Journal of Financial Services Research, Springer, vol. 29(2), pages 105-123, April. [Downloadable!] (restricted)
  17. Grais, Wafik & Pellegrini, Matteo, 2006. "Corporate governance in institutions offering Islamic financial services : issues and options," Policy Research Working Paper Series 4052, The World Bank. [Downloadable!]
  18. Levine, Ross, 2004. "The Corporate Governance of Banks - a concise discussion of concepts and evidence," Policy Research Working Paper Series 3404, The World Bank. [Downloadable!]
  19. Adams, Renée B. & Ferreira, Daniel, 2005. "Do Directors Perform for Pay?," CEI Working Paper Series 2005-2, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
    Other versions:
  20. Eva Jansson, 0. "Deregulation, property rights, and legal system," European Journal of Law and Economics, Springer, vol. 0, pages 1-25. [Downloadable!] (restricted)
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