Management Insulation and Bank Failures

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

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


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.
Original languageEnglish
Article number100909
JournalJournal of Financial Intermediation
Number of pages11
Publication statusPublished - Jul 2021

Bibliographical note

Published online: 23 April 2021.


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

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