Board Effectiveness in the European Banking Industry

Ilduara Busta, Bersant Hobdari

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    The existence of different optimal governance structures across industries is often cited as the reason for the lack of a significant relationship between firms' board of directors and financial performance. We provide evidence of the nature of the relationship between the size and independence of the board and directors and financial performance in banking by allowing for separate behaviours under different institutional settings. Using a panel dataset of listed banks in France, Germany, Italy, Spain and the UK, we show that banks with higher presence of non-executives in their boards perform better in Continental Europe, while the opposite is the case in the UK. Bank size though does not seem to impact bank performance.
    The existence of different optimal governance structures across industries is often cited as the reason for the lack of a significant relationship between firms' board of directors and financial performance. We provide evidence of the nature of the relationship between the size and independence of the board and directors and financial performance in banking by allowing for separate behaviours under different institutional settings. Using a panel dataset of listed banks in France, Germany, Italy, Spain and the UK, we show that banks with higher presence of non-executives in their boards perform better in Continental Europe, while the opposite is the case in the UK. Bank size though does not seem to impact bank performance.
    LanguageEnglish
    JournalInternational Journal of Corporate Governance
    Volume6
    Issue number1
    Pages25-41
    ISSN1754-3037
    DOIs
    StatePublished - 2015

    Bibliographical note

    CBS Library does not have access to the material

    Keywords

      Cite this

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      title = "Board Effectiveness in the European Banking Industry",
      abstract = "The existence of different optimal governance structures across industries is often cited as the reason for the lack of a significant relationship between firms' board of directors and financial performance. We provide evidence of the nature of the relationship between the size and independence of the board and directors and financial performance in banking by allowing for separate behaviours under different institutional settings. Using a panel dataset of listed banks in France, Germany, Italy, Spain and the UK, we show that banks with higher presence of non-executives in their boards perform better in Continental Europe, while the opposite is the case in the UK. Bank size though does not seem to impact bank performance.",
      keywords = "Corporate governance, Board size, Board independence, Banks, Europe, Board effectiveness, Banking industry, Board of directors, Firm performance, Financial performance, France, Germany, Italy, Spain, UK, United Kingdom, Non-executive directors, Bank performance",
      author = "Ilduara Busta and Bersant Hobdari",
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      year = "2015",
      doi = "10.1504/IJCG.2015.069758",
      language = "English",
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      Board Effectiveness in the European Banking Industry. / Busta, Ilduara; Hobdari, Bersant.

      In: International Journal of Corporate Governance, Vol. 6, No. 1, 2015, p. 25-41.

      Research output: Contribution to journalJournal articleResearchpeer-review

      TY - JOUR

      T1 - Board Effectiveness in the European Banking Industry

      AU - Busta,Ilduara

      AU - Hobdari,Bersant

      N1 - CBS Library does not have access to the material

      PY - 2015

      Y1 - 2015

      N2 - The existence of different optimal governance structures across industries is often cited as the reason for the lack of a significant relationship between firms' board of directors and financial performance. We provide evidence of the nature of the relationship between the size and independence of the board and directors and financial performance in banking by allowing for separate behaviours under different institutional settings. Using a panel dataset of listed banks in France, Germany, Italy, Spain and the UK, we show that banks with higher presence of non-executives in their boards perform better in Continental Europe, while the opposite is the case in the UK. Bank size though does not seem to impact bank performance.

      AB - The existence of different optimal governance structures across industries is often cited as the reason for the lack of a significant relationship between firms' board of directors and financial performance. We provide evidence of the nature of the relationship between the size and independence of the board and directors and financial performance in banking by allowing for separate behaviours under different institutional settings. Using a panel dataset of listed banks in France, Germany, Italy, Spain and the UK, we show that banks with higher presence of non-executives in their boards perform better in Continental Europe, while the opposite is the case in the UK. Bank size though does not seem to impact bank performance.

      KW - Corporate governance

      KW - Board size

      KW - Board independence

      KW - Banks

      KW - Europe

      KW - Board effectiveness

      KW - Banking industry

      KW - Board of directors

      KW - Firm performance

      KW - Financial performance

      KW - France

      KW - Germany

      KW - Italy

      KW - Spain

      KW - UK

      KW - United Kingdom

      KW - Non-executive directors

      KW - Bank performance

      U2 - 10.1504/IJCG.2015.069758

      DO - 10.1504/IJCG.2015.069758

      M3 - Journal article

      VL - 6

      SP - 25

      EP - 41

      JO - International Journal of Corporate Governance

      T2 - International Journal of Corporate Governance

      JF - International Journal of Corporate Governance

      SN - 1754-3037

      IS - 1

      ER -