Bank board structure and performance: Evidence for large bank holding companies

Adams, Renée B and Mehran, Hamid (2012) Bank board structure and performance: Evidence for large bank holding companies. Journal of Financial Intermediation, 21 2: 243-267. doi:10.1016/j.jfi.2011.09.002


Author Adams, Renée B
Mehran, Hamid
Title Bank board structure and performance: Evidence for large bank holding companies
Journal name Journal of Financial Intermediation   Check publisher's open access policy
ISSN 1042-9573
1096-0473
Publication date 2012-04-01
Year available 2011
Sub-type Article (original research)
DOI 10.1016/j.jfi.2011.09.002
Open Access Status Not yet assessed
Volume 21
Issue 2
Start page 243
End page 267
Total pages 25
Place of publication Maryland Heights, MO, U.S.A.
Publisher Academic Press
Language eng
Subject 2003 Finance
2002 Economics and Econometrics
Abstract The subprime crisis highlights how little we know about bank governance. This paper addresses a long-standing gap in the literature by analyzing the relationship between board governance and performance using a sample of banking firm data that spans 34. years. We find that board independence is not related to performance, as measured by a proxy for Tobin's Q. However, board size is positively related to performance. Our results are not driven by M&A activity. But, we provide new evidence that increases in board size due to additions of directors with subsidiary directorships may add value as BHC complexity increases. We conclude that governance regulation should take unique features of bank governance into account.
Formatted abstract
The subprime crisis highlights how little we know about bank governance. This paper addresses a long-standing gap in the literature by analyzing the relationship between board governance and performance using a sample of banking firm data that spans 34 years. We find that board independence is not related to performance, as measured by a proxy for Tobin’s Q. However, board size is positively related to performance. Our results are not driven by M&A activity. But, we provide new evidence that increases in board size due to additions of directors with subsidiary directorships may add value as BHC complexity increases. We conclude that governance regulation should take unique features of bank governance into account.
Keyword Corporate governance
Board structure
Banking industry
Holding company
Complexity
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Available online 7 October 2011.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2013 Collection
UQ Business School Publications
 
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Created: Thu, 22 Mar 2012, 19:45:45 EST by Karen Morgan on behalf of UQ Business School