IDEAS home Printed from
   My bibliography  Save this paper

Do Independence and Financial Expertise of the Board Matter for Risk Taking and Performance?


  • Minton, Bernadette

    (Ohio State University)

  • Taillard, Jerome P. A.

    (Boston College)

  • Williamson, Rohan

    (Georgetown University)


We examine how risk taking and firm value are related to board independence and financial expertise for a broad sample of U.S. financial institutions during the 2001 to 2008 period. Market-based measures of risk are negatively related to the percent of independent directors, while market-based risk measures, leverage, and stock performance prior to the crisis are all positively related to the percent of independent directors who are financial experts. These associations are primarily driven by large banks in our sample. During the crisis, financial expertise is negatively related to both Tobin's Q and cumulative stock performance and positively related to the probability of receiving TARP funds. The results are consistent with financial expertise being associated with more risk taking and higher firm value especially for large banks prior to the crisis; however, the presence of financial experts on the banks' boards did not help in alleviating the impact of the financial crisis.

Suggested Citation

  • Minton, Bernadette & Taillard, Jerome P. A. & Williamson, Rohan, 2010. "Do Independence and Financial Expertise of the Board Matter for Risk Taking and Performance?," Working Paper Series 2010-14, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
  • Handle: RePEc:ecl:ohidic:2010-14

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ahmed Zemzem & Oumeima Kacem, 2014. "Risk Management, Board Characteristics and Performance in the Tunisian Lending Institutions," International Journal of Finance & Banking Studies, Society for the Study of Business & Finance, vol. 3(1), pages 186-200, January.
    2. Aebi, Vincent & Sabato, Gabriele & Schmid, Markus, 2012. "Risk management, corporate governance, and bank performance in the financial crisis," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3213-3226.
    3. Sun, Jerry & Liu, Guoping, 2014. "Audit committees’ oversight of bank risk-taking," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 376-387.
    4. repec:spt:apfiba:v:8:y:2018:i:2:f:8_2_6 is not listed on IDEAS

    More about this item

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecl:ohidic:2010-14. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.