Management Insulation and Bank Failures

Daniel Ferreira*, David Kershaw, Tom Kirchmaier, Edmund Schuster

*Corresponding author af dette arbejde

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Abstrakt

How does management insulation from shareholder pressure influence banks’ resilience to crises? To address this question, we develop a measure of management insulation based on legal provisions. Unlike the existing alternatives, our measure considers the interactions between different provisions. We use this measure to study the relationship between management insulation and bank failure during the 2007–09 financial crisis. We find that banks in which managers were more insulated from shareholders in 2003 were less likely to be both bailed out in 2008/09 and targeted by activist shareholders. By contrast, alternative measures of management insulation fail to predict both bailouts and shareholder activism.
OriginalsprogEngelsk
Artikelnummer100909
TidsskriftJournal of Financial Intermediation
Vol/bind47
Antal sider11
ISSN1042-9573
DOI
StatusUdgivet - jul. 2021

Bibliografisk note

Published online: 23 April 2021.

Emneord

  • Management insulation
  • Bank performance
  • Corporate governance
  • Financial crisis

Citationsformater