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.
    Original languageEnglish
    JournalInternational Journal of Corporate Governance
    Volume6
    Issue number1
    Pages (from-to)25-41
    ISSN1754-3037
    DOIs
    Publication statusPublished - 2015

    Bibliographical note

    CBS Library does not have access to the material

    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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    journal = "International Journal of Corporate Governance",
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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

    JF - International Journal of Corporate Governance

    SN - 1754-3037

    IS - 1

    ER -