Board Accountability and Risk Taking in Banking – Evidence from a Quasi-Experiment
In this paper, a law reform is evaluated that aimed at improving the corporate governance of German savings banks by tightening accountability and legal liability of outside directors. The causal effect of this reform on bank risk is identified by difference-in-differences and triple differences strategies. The estimation results show that savings banks subject to the reform increased capital and liquidity ratios. Hence, they have become less vulnerable to unexpected losses and liquidity shocks. This indicates that the low occurrence of outside director litigation reflects incentive effects of current liability regimes.
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- Rüdiger Fahlenbrach & Angie Low & René M. Stulz, 2010.
"The Dark Side of Outside Directors: Do they Quit When They are Most Needed?,"
Swiss Finance Institute Research Paper Series
10-17, Swiss Finance Institute.
- Rüdiger Fahlenbrach & Angie Low & René M. Stulz, 2010. "The dark side of outside directors: Do they quit when they are most needed?," NBER Working Papers 15917, National Bureau of Economic Research, Inc.
- Fahlenbrach, Rudiger & Low, Angie & Stulz, Rene M., 2010. "The Dark Side of Outside Directors: Do They Quit When They Are Most Needed?," Working Paper Series 2010-7, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Daniel S. Hamermesh & Stephen J. Trejo, 2000.
"The Demand for Hours of Labor: Direct Evidence from California,"
The Review of Economics and Statistics,
MIT Press, vol. 82(1), pages 38-47, February.
- Daniel S. Hamermesh & Stephen J. Trejo, 1997. "The Demand for Hours of Labor: Direct Evidence from California," NBER Working Papers 5973, National Bureau of Economic Research, Inc.
- Pathan, Shams, 2009. "Strong boards, CEO power and bank risk-taking," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1340-1350, July.
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