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Corporate Performance, Board Structure, and Their Determinants
in the Banking Industry
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June 2008 Number
330 Revised October 2011 |
JEL classification: G34, G21, J41, L22 |
Authors: Reneé B. Adams and Hamid Mehran 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 span thirty-four 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 bank holding company complexity increases. We conclude that governance regulation should take unique features of bank governance into account. |
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