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The effect of corporate governance on the performance of US investment banks
journal contribution
posted on 2023-06-08, 22:12 authored by Emmanuel Mamatzakis, Theodora BermpeiThis paper focuses on the impact of the corporate governance, using a plethora of measures, on the performance of the US investment banks over the 2000–2012 period. This time period offers a unique set of information, related to the credit crunch, that we model using a dynamic panel threshold analysis to reveal new insights into the relationship between corporate governance and bank performance. Results show that the board size asserts a negative effect on performance consistent with the ‘agency cost ’ hypothesis, particularly for banks with board size higher than ten members. Threshold analysis reveals that in the post-crisis period most of investment banks opt for boards with less than ten members, aiming to decrease agency conflicts that large boards suffer from. We also find a negative association between the operational complexity and performance. Moreover, the CEO power asserts a positive effect on performance consistent with the ‘ stewardship ’ hypothesis. In addition, an increase in the bank ownership held by the board has a negative impact on performance for banks below a certain threshold. On the other hand, for banks with board ownership above the threshold value this effect turns positive, indicating an alignment between shareholders’ and managers’ incentives.
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Publication status
- Published
File Version
- Published version
Journal
Financial Markets, Institutions And InstrumentsISSN
0963-8008Publisher
Blackwell PublishingExternal DOI
Issue
2-3Volume
24Page range
191-239Department affiliated with
- Business and Management Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2015-08-25First Open Access (FOA) Date
2017-09-01First Compliant Deposit (FCD) Date
2015-08-25Usage metrics
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