Implications for bank risk when directors are related to minority shareholders

Thierno Amadou Barry; Laetitia Lepetit; Frank Strobel; Thu Ha Tran

doi:10.1007/s10693-021-00371-y

Implications for bank risk when directors are related to minority shareholders

Thierno Amadou Barry, Laetitia Lepetit, Frank Strobel, Thu Ha Tran

Economics

Research output: Contribution to journal › Article › peer-review

48 Downloads (Pure)

Abstract

We examine whether directors on a board who are related to minority shareholders have an effect on bank risk. We use a panel of European banks with a controlling shareholder over the period from 2003 to 2017 and find that these directors result in lower risk. Our results depend crucially on whether or not such directors have reputational concerns or financial expertise, and the level of shareholder protection; the observed decrease in risk does not depend on their position on the board or on the presence of controlling shareholders. To identify the relationship, we use a dynamic generalized method of moments.

Original language	English
Pages (from-to)	233-265
Number of pages	33
Journal	Journal of Financial Services Research
Volume	62
Issue number	3
Early online date	21 Jan 2022
DOIs	https://doi.org/10.1007/s10693-021-00371-y
Publication status	Published - 1 Dec 2022

Bibliographical note

Funding Information:
This work was supported by the AAP Région Nouvelle Aquitaine (2018-1R40110) “Optimal bank board structure: Finding the right fit for all stakeholders”, coordinated by the Université de Limoges. Further competing interests: none.

Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.

Keywords

Bank governance
Bank risk
Financial expertise
Minority shareholder related directors

ASJC Scopus subject areas

Economics and Econometrics
Accounting
Finance

Access to Document

10.1007/s10693-021-00371-y

barryt2021implications
This document is subject to Springer Nature terms of use: https://www.springernature.com/gp/open-research/policies/accepted-manuscript-terms
Accepted author manuscript, 824 KBLicence: Other (please specify with Rights Statement)

Cite this

@article{f42647163ecb4eae87ce9c64858c1e68,

title = "Implications for bank risk when directors are related to minority shareholders",

abstract = "We examine whether directors on a board who are related to minority shareholders have an effect on bank risk. We use a panel of European banks with a controlling shareholder over the period from 2003 to 2017 and find that these directors result in lower risk. Our results depend crucially on whether or not such directors have reputational concerns or financial expertise, and the level of shareholder protection; the observed decrease in risk does not depend on their position on the board or on the presence of controlling shareholders. To identify the relationship, we use a dynamic generalized method of moments.",

keywords = "Bank governance, Bank risk, Financial expertise, Minority shareholder related directors",

author = "Barry, {Thierno Amadou} and Laetitia Lepetit and Frank Strobel and Tran, {Thu Ha}",

note = "Funding Information: This work was supported by the AAP R{\'e}gion Nouvelle Aquitaine (2018-1R40110) “Optimal bank board structure: Finding the right fit for all stakeholders”, coordinated by the Universit{\'e} de Limoges. Further competing interests: none. Publisher Copyright: {\textcopyright} 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.",

year = "2022",

month = dec,

day = "1",

doi = "10.1007/s10693-021-00371-y",

language = "English",

volume = "62",

pages = "233--265",

journal = "Journal of Financial Services Research",

issn = "0920-8550",

publisher = "Springer",

number = "3",

}

TY - JOUR

T1 - Implications for bank risk when directors are related to minority shareholders

AU - Barry, Thierno Amadou

AU - Lepetit, Laetitia

AU - Strobel, Frank

AU - Tran, Thu Ha

N1 - Funding Information: This work was supported by the AAP Région Nouvelle Aquitaine (2018-1R40110) “Optimal bank board structure: Finding the right fit for all stakeholders”, coordinated by the Université de Limoges. Further competing interests: none. Publisher Copyright: © 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.

PY - 2022/12/1

Y1 - 2022/12/1

N2 - We examine whether directors on a board who are related to minority shareholders have an effect on bank risk. We use a panel of European banks with a controlling shareholder over the period from 2003 to 2017 and find that these directors result in lower risk. Our results depend crucially on whether or not such directors have reputational concerns or financial expertise, and the level of shareholder protection; the observed decrease in risk does not depend on their position on the board or on the presence of controlling shareholders. To identify the relationship, we use a dynamic generalized method of moments.

AB - We examine whether directors on a board who are related to minority shareholders have an effect on bank risk. We use a panel of European banks with a controlling shareholder over the period from 2003 to 2017 and find that these directors result in lower risk. Our results depend crucially on whether or not such directors have reputational concerns or financial expertise, and the level of shareholder protection; the observed decrease in risk does not depend on their position on the board or on the presence of controlling shareholders. To identify the relationship, we use a dynamic generalized method of moments.

KW - Bank governance

KW - Bank risk

KW - Financial expertise

KW - Minority shareholder related directors

UR - http://www.scopus.com/inward/record.url?scp=85123237720&partnerID=8YFLogxK

U2 - 10.1007/s10693-021-00371-y

DO - 10.1007/s10693-021-00371-y

M3 - Article

SN - 0920-8550

VL - 62

SP - 233

EP - 265

JO - Journal of Financial Services Research

JF - Journal of Financial Services Research

IS - 3

ER -

Implications for bank risk when directors are related to minority shareholders

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

Fingerprint

Cite this