Corporate governance in banking: The role of Board of Directors
AbstractWe test hypotheses on the dual role of boards of directors for a sample of large international commercial banks. We find an inverted U shaped relation between bank performance and board size that justifies a large board and imposes an efficient limit to the board’s size; a positive relation between the proportion of non-executive directors and performance; and a proactive role in board meetings. Our results show that bank boards’ composition and functioning are related to directors’ incentives to monitor and advise management. All these relations hold after we control for bank business, institutional differences, size, market power in the banking industry, bank ownership and investors’ legal protection.
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Bibliographic InfoPaper provided by Department of Business Economics, Universitat Autonoma de Barcelona in its series Working Paper with number 200604.
Date of creation: Jun 2006
Date of revision:
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Corporate Governance; Board of Directors; Commercial Banks;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-18 (All new papers)
- NEP-BAN-2006-11-18 (Banking)
- NEP-CFN-2006-11-18 (Corporate Finance)
- NEP-CSE-2006-11-18 (Economics of Strategic Management)
- NEP-EFF-2006-11-18 (Efficiency & Productivity)
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