Sitting on the Fence: Does Having a "Dual-Director" Add to Bank Profitability?
This paper investigates how the combination of positions of the Board of Directors and management affects bank's profitability. We use the 2010 bank-level data from 112 countries. Our results show that the positions' combination reduces banks' ROE. However, for banks in developing countries, the influence is close to zero and even positive for some specifications. We also show that the higher is the proportion of the Board members, who also hold a managerial position the lower is the profitability of a bank. This effect is, however, close to zero for banks in the developing countries. Thus, the corporate governance regulation should go beyond a simple restriction on holding simultaneously the CEO and the head of Board of Directors positions. The exception should be made for the developing countries, where the additional restrictions are not necessary.
Volume (Year): 20 (2013)
Issue (Month): 4 ()
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- Savchenko, P. & Semenova, M., 2013.
"Sitting on the Fence: Does Having a "Dual-Director" Add to Bank Profitability?,"
Journal of the New Economic Association,
New Economic Association, vol. 20(4), pages 12-32.
- Polina Savchenko & Maria Semenova, 2013. "Sitting on the fence: does having a ‘dual-director’ add to bank profitability?," HSE Working papers WP BRP 16/FE/2013, National Research University Higher School of Economics.
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