Does board structure in banks really affect their performance?

Pathan, Shams and Faff, Robert (2013) Does board structure in banks really affect their performance?. Journal of Banking and Finance, 37 5: 1573-1589. doi:10.1016/j.jbankfin.2012.12.016

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Author Pathan, Shams
Faff, Robert
Title Does board structure in banks really affect their performance?
Journal name Journal of Banking and Finance   Check publisher's open access policy
ISSN 0378-4266
Publication date 2013-05
Year available 2013
Sub-type Article (original research)
DOI 10.1016/j.jbankfin.2012.12.016
Open Access Status
Volume 37
Issue 5
Start page 1573
End page 1589
Total pages 17
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Collection year 2014
Language eng
Abstract We study whether board structure (board size, independence and gender diversity) in banks relates to performance. Using a broad panel of large US bank holding companies over the period 1997–2011, we find that both board size and independent directors decrease bank performance. Although gender diversity improves bank performance in the pre-Sarbanes–Oxley Act (SOX) period (1997–2002), the positive effect of gender diminishes in both the post-SOX (2003–2006) and the crisis periods (2007–2011). Finally, we show that board structure is particularly relevant for banks with low market power, if they are immune to the threat of external takeover and/or they are small. Our two-step system generalised method of moments estimation accounts for endogeneity concerns (simultaneity, reverse causality and unobserved heterogeneity). The findings are robust to a wide range of other sensitivity checks including alternative proxies for bank performance.
Keyword Board structure
Board independence
Gender diversity
Bank holding companies
System GMM
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Available online: 23 January 2013.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
UQ Business School Publications
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Citation counts: TR Web of Science Citation Count  Cited 15 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 21 times in Scopus Article | Citations
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Created: Thu, 24 Jan 2013, 10:16:12 EST by Dr Shams Pathan on behalf of UQ Business School