Corporate Governance, Performance and Risk-Taking in the U.S. Banking Industry

<p>In this dissertation, we first examine the relationship between performance of the bank holding company and several board characteristics. We use five proxies for bank performance including Tobin’s Q, ROA, loan loss reserve ratio, non-performing asset ratio, and net charge-offs ratio. Board characteristic variables we include are board size, proportion of outsiders, CEO power, CEO tenure and board tenure. We find that a large board enhances bank performance, as proxied by Tobin’s Q and loan quality variables. We find no evidence that board structure or CEO power influences firm performance. We see that CEO and board tenure have a positive effect on firm performance. We further employ a crisis dummy during the period 2007 through 2009 to determine if the relationships between firm performance and board characteristics changed during the crisis. Our crisis results show us that board size has a negative effect on Tobin’s Q and the non-performing asset ratio during the crisis. Further, we find that board structure decreases the non-performing asset ratio during the crisis.</p> <p>We next examine the relationship between risk-taking of the bank holding company and several board characteristics. We use four accounting based proxies for bank risk-taking including credit risk, liquidity risk, capital ratio and operational risk. We also use three market based proxies for bank risk including market beta, idiosyncratic risk and the standard deviation of its stock return. Board characteristic variables we include are board size, board independence, CEO duality, CEO tenure and board tenure. We find that a large board reduces both balance sheet and market risk. We further investigate the relationships between risk-taking and board characteristics changed during the financial crisis of 2007-2009. We find that our results are robust during the crisis.</p>

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics and Finance

Year dc:date.available

2012

Author dc:creator

• OSullivan, Jennifer

Contributors dc:contributor

• M. Kabir Hassan
• Atsuyuki Naka
• Wei Wang

• bank performance, bank risk-taking, board characteristics, board of directors
• Corporate Finance

Repository record dc:identifier

https://scholarworks.uno.edu/td/1521

OAI identifier oai:identifier

oai:scholarworks.uno.edu:td-2534