Board monitoring, regulation, and performance in the banking industry: evidence from the Market for Corporate Control

Hagendorff, Jens ORCID: https://orcid.org/0000-0002-3567-7826, Collins, Michael and Keasey, Kevin 2010. Board monitoring, regulation, and performance in the banking industry: evidence from the Market for Corporate Control. Corporate Governance An International Review 18 (5) , pp. 381-395. 10.1111/j.1467-8683.2010.00815.x

Full text not available from this repository.

Abstract

Manuscript Type: Empirical Research Question/Issue: The specific monitoring effect of boards of directors versus industry regulation is unclear. In this paper, we examine how the interaction between bank-level monitoring and regulatory regimes influences the announcement period returns of acquiring banks in the US and twelve European economies. Research Findings/Insights: We study three board monitoring mechanisms – independence, CEO-chair duality, and diversity – and analyze their effectiveness in preventing underperforming merger strategies under bank regulators of varying strictness. Only under strict banking regulation regimes, do board independence and diversity improve acquisition performance. In less strict regulatory environments, corporate governance is virtually irrelevant in improving the performance outcomes of merger activities. Theoretical/Academic Implications: Our results indicate a complementary role between monitoring by boards and bank regulation. This study is the first to report evidence consistent with complementarity by investigating the effectiveness (rather than the prevalence) of governance arrangements across regulatory regimes. Practitioner/Policy Implications: Our work offers insights to policymakers charged with improving the quality of decision-making at financial institutions. Attempts to improve the ability of bank boards to critically assess managerial initiatives are most likely to be successful if internal governance is accompanied by strict industry regulation.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HF Commerce H Social Sciences > HF Commerce > HF5601 Accounting
Additional Information:	Article first published online 28 July 2010
Publisher:	John Wiley & Sons
ISSN:	1467-8683
Last Modified:	28 Oct 2022 09:58
URI:	https://orca.cardiff.ac.uk/id/eprint/76286

Citation Data

Cited 37 times in Scopus. View in Scopus. Powered By Scopus® Data

Actions (repository staff only)

Edit Item