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

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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

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barryt2021implications
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Cite this

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Implications for bank risk when directors are related to minority shareholders

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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