Abstract Manuscript type Review Research Question/Issue Bank governance has become the focus of a flurry recent research and heated policy debates. However, literature presents seemingly conflicting evidence on implications for bank risk‐taking. The purpose this paper is to review prior work propose directions future role stability. Findings/Insights We highlight number key devices how these shape risk‐taking: effectiveness boards, structure CEO compensation, risk management systems...

Using an international sample of large banks between 2000 and 2010, we evaluate the risk sensitivity minimum capital requirements. Our results show that risk-weighted assets (the regulatory measure portfolio risk, which determines requirements) are ill-calibrated to a market bank risk. We this low-risk requirements permits build up buffers by underreporting their undermines banks' ability withstand adverse shocks. While is higher for have adopted Basel II, it remains low across countries.

We exploit variation in the cultural heritage across U.S. CEOs who are children or grandchildren of immigrants to demonstrate that origins matter for corporate outcomes. Following shocks industry competition, firms led by second- third-generation associated with a 6.2% higher profitability compared average firm. This effect weakens over successive immigrant generations and cannot be detected top executives apart from CEO. Additional analysis attributes this various values prevail CEO's...

Abstract Manuscript Type Empirical Research Question/Issue This study seeks to understand how the characteristics of executive directors affect market performance US banks. To explore expected effects linked characteristics, we measure any changes in valuation banks announcements appointments. Findings/Insights Our has two important findings. First, show that age, education, and prior work experience executives create shareholder wealth while gender is not measurable value effects. Second,...

We study regulatory enforcement actions issued against US banks to show that both board monitoring and advising are effective in preventing misconduct by banks. While better boards prevents all categories of misconduct, a technical nature. Board increases the likelihood is detected, penalties imposed on CEO, alleviates shareholder wealth losses following detection regulators. Our article offers novel insights how structure bank prevent misconduct.

Abstract We examine the value of board diversity in US banking industry as a mechanism to enhance decision-making capabilities board. employ sample mergers assess if measures displayed by bidding bank's are linked market performance acquisitions. find positive announcement returns approved boards whose members diverse terms their occupational background. By contrast, age and tenure associated with wealth losses surrounding acquisition announcements, while gender does not lead measurable...

This paper studies the impact of European bank mergers and acquisitions on changes in key safety soundness measures both acquirers targets. We find that capitalization, profitability liquidity show signs statistically economically significant mean reversion for acquirers. Also, cross-border deals tended to perform better when their home country prudential supervisors deposit insurance funding systems were stricter than target‘s. For target banks, most consistent findings from cross-sectional...

We examine the contractual implications of a lender’s trust for corporate loans. measure how trusting lender is using average attitude in chief executive officer’s ancestral country origin. find that banks with CEOs charge lower interest rates U.S. syndicated This effect identified within existing lender–borrower relationships and similar types Further analyses indicate reduces cost credit by boosting perceived credibility borrower information mitigating contracting problems. corroborate our...

Given the pivotal role of banks in modern economies, worldwide phenomenon a high level bank M&A activity and consensus view empirical studies that mergers destroy value for acquiring shareholders, it is highly surprising influence corporate governance on outcomes acquisitions has received very little academic scrutiny. The recent wave consolidation financial services industry, with its generally unfavourable wealth implications shareholders institutions, points to impact poor structures....

Abstract The banking industry has one of the most active markets for mergers and acquisitions. However, little is known about type operational strategies adopted by firms in years following a deal. For sample bidding banks USA Europe, this study compares design performance implications different post‐merger both geographical regions. Using accounting data, we show that European pursue cost‐cutting strategy increasing efficiency levels vis‐à‐vis non‐merging cutting back on labour costs...

ABSTRACT Manuscript Type: Empirical Research Question/Issue: The specific monitoring effect of boards directors versus industry regulation is unclear. In this paper, we examine how the interaction between bank‐level and regulatory regimes influences announcement period returns acquiring banks in US twelve European economies. Findings/Insights: We study three board mechanisms – independence, CEO‐chair duality, diversity analyze their effectiveness preventing underperforming merger strategies...

We investigate the link between incentive mechanisms embedded in CEO cash bonuses and riskiness of banks. For a sample U.S. European banks, we employ Merton distance to default model show that increases lower risk bank. However, find no evidence exerting risk‐reducing effect when banks are financially distressed or operate under weak bank regulatory regimes. Our results bonus compensation banking financial stability caution attempts regulate pay need tailor incentives

Abstract Firms face pressure to improve their environmental performance. However, in addition making substantive investments that enhance outcomes, firms may also engage are green but mostly symbolic and not effective improving To examine whether the skill make enhancing performance, we analyse detailed job posting data from 2010 2020 micro‐level on toxic chemical emissions plants. We find an increased demand for skills is associated with subsequent reductions releases at plants, especially...

We analyze the takeover premiums paid for a sample of European bank mergers between 1997 and 2007. find that acquiring banks value profitable, high-growth low risk targets. also strength regulation supervision as well deposit insurance regimes in Europe have measurable effects on pricing. Stricter regulatory stronger schemes lower by banks. This result, presumably anticipation higher compliance costs, is mainly driven domestic deals. Also, we no conclusive evidence bidders seek to extract...

Abstract We investigate if the decentralized structure of regulatory office networks influences supervisory outcomes and bank behavior. Following closure an office, banks previously supervised by that increase their lending risk‐taking. As a result, affected have larger loan losses higher failure rates during 2008–09 financial crisis. Analysis channels suggests proximate supervisors enforce timelier provisioning practices, restrict large cash payouts, provide advice increases bank's...