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Bank Misconduct, Board Diversity and CEO Turnover

Author

Listed:
  • B. Casu
  • A. Gallo
  • E. Kalotychou
  • A. Sarkisyan

Abstract

This paper investigates corporate reactions to bank misconduct episodes. We test whether more diverse boards have a stronger disciplining effect and trigger “changes at the top†. We consider misconduct fines issued by US regulators to EU listed banks during the period 2009–2018. We find that CEO dismissals are more likely following regulatory fines, but not during the investigation process. Board gender diversity does not seem to impact on boards’ decision to fire the CEO, nor reinforce boards' disciplining effect in the presence of misconduct. The presence of foreign directors and age diversity increase the likelihood of CEO dismissal following regulatory sanctions.

Suggested Citation

  • B. Casu & A. Gallo & E. Kalotychou & A. Sarkisyan, 2023. "Bank Misconduct, Board Diversity and CEO Turnover," Review of Corporate Finance, now publishers, vol. 3(1-2), pages 149-174, May.
    • Handle: RePEc:now:jnlrcf:114.00000038
    DOI: 10.1561/114.00000038
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    More about this item

    Keywords

    Misconduct; gender diversity; CEO turnover; Board of Directors; bank;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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