Journal ArticleDOI
Financial Expertise of the Board, Risk Taking, and Performance: Evidence from Bank Holding Companies
TLDR
This article found that financial expertise among independent directors of U.S. banks is positively associated with balance-sheet and market-based measures of risk in the run-up to the 2007-2008 financial crisis.Abstract:
Financial expertise among independent directors of U.S. banks is positively associated with balance-sheet and market-based measures of risk in the run-up to the 2007–2008 financial crisis. While financial expertise is weakly associated with better performance before the crisis, it is strongly related to lower performance during the crisis. Overall, the results are consistent with independent directors with financial expertise supporting increased risk taking prior to the crisis. Despite being consistent with shareholder value maximization ex ante, these actions become detrimental during the crisis. These results are not driven by powerful chief executive officers who select independent financial experts to rubber stamp strategies that satisfy their risk appetite.read more
Citations
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Journal ArticleDOI
Women on board: does boardroom gender diversity affect firm risk?
TL;DR: In this paper, the authors investigate the relationship between boardroom gender diversity and firm risk, using a dynamic model that controls for reverse causality and for gender and risk being influenced by unobservable firm factors.
Journal ArticleDOI
Board diversity, firm risk, and corporate policies
TL;DR: In this paper, the effects of diversity in the board of directors on corporate policies and risk were examined using a multidimensional measure, and it was found that greater board diversity leads to lower volatility and better performance.
Journal ArticleDOI
Corporate governance and bank risk-taking
TL;DR: In this paper, the authors highlight a number of key governance devices and how these shape bank risk-taking: the effectiveness of bank boards, the structure of CEO compensation, and the risk management systems and practices employed by banks.
Journal ArticleDOI
Risk in Islamic banking and corporate governance
Safiullah,Abul Shamsuddin +1 more
TL;DR: The authors examined the differences in risk between Islamic and conventional banks with specific attention to the role of Shariah supervisory board (SSB) composition on risk in Islamic banks and found that Islamic banks have a higher liquidity risk, lower credit risk, and lower insolvency risk, but encounter similar operational risk in comparison with conventional banks.
References
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Journal ArticleDOI
An analytic derivation of the cost of deposit insurance and loan guarantees An application of modern option pricing theory
TL;DR: In this paper, a formula is derived to evaluate the cost of issuing a guarantee of a loan by a third party, and the method used is to demonstrate an isomorphic correspondence between loan guarantees and common stock put options and then to use the well developed theory of option pricing to derive the formula.
Journal ArticleDOI
Boards: Does one size fit all?
TL;DR: In this paper, the authors examined the relation between firm value and board structure and found that complex firms, which have greater advising requirements than simple firms, have larger boards with more outside directors, and this relation is driven by the number of outside directors.
Posted Content
Endogenously Chosen Boards of Directors and Their Monitoring of the CEO
TL;DR: In this paper, Hermalin et al. developed a model in which the effectiveness of a board's monitoring of the CEO depends on the board's independence, and the independence of new directors is determined through negotiations (implicit or explicit) between the existing directors and the CEO.
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Deposit Insurance, Risk, and Market Power in Banking
TL;DR: In this paper, the authors test the hypothesis that increases in competition caused bank charter values to decline, which in turn caused banks to increase default risk through increases in asset risk and reductions in capital.
Journal ArticleDOI
The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey
TL;DR: A survey of the literature on boards of directors, with an emphasis on research done subsequent to the Benjamin E. Hermalin and Michael S. Weisbach (2003) survey, can be found in this article.