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

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  • 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.

Suggested Citation

  • Adams, Renée B. & Mehran, Hamid, 2012. "Bank board structure and performance: Evidence for large bank holding companies," Journal of Financial Intermediation, Elsevier, vol. 21(2), pages 243-267.
  • Handle: RePEc:eee:jfinin:v:21:y:2012:i:2:p:243-267
    DOI: 10.1016/j.jfi.2011.09.002
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    References listed on IDEAS

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    More about this item

    Keywords

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

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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