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Evaluating the Board of Directors of Financial Intermediaries: Competencies, Effectiveness and Performance

27 Pages Posted: 15 Feb 2009  

Alessandro Carretta

University of Rome, Tor Vergata - Faculty of Economics

Vincenzo Farina

University of Rome, Tor Vergata - Faculty of Economics; University of Rome, Tor Vergata - Department of Financial and Quantitative Economics

Paola Schwizer

University of Parma

Date Written: February 15, 2009

Abstract

This paper proposes a model for analysing the effectiveness of boards of directors of financial intermediaries. The European Union recommends that companies in the Member States annually evaluate the performance of their boards. The degree of effectiveness of a board should be appreciated taking into account the business structure, ownership and institutional model of the firm, on the one hand, and the characteristics of its board, in terms of its composition, structure and skills, on the other hand.

This paper also outlines the specificity of the role played by boards of directors in financial intermediaries, also in the light of the industry standards and regulations, and provides an overview of the board assessment methodologies proposed in literature, or developed by listed companies on the Anglo-saxon markets, with a view to considering their applicability to the financial sector. Lastly, and based on the foregoing, the paper proposes a model for diagnosing the conditions that need to be put into place to ensure the suitability of boards of directors and to evaluate the performance of both the board as a whole and the individual directors.

Keywords: Corporate Governance, Board of Directors, Performance

JEL Classification: G34, L20

Suggested Citation

Carretta, Alessandro and Farina, Vincenzo and Schwizer, Paola, Evaluating the Board of Directors of Financial Intermediaries: Competencies, Effectiveness and Performance (February 15, 2009). Available at SSRN: https://ssrn.com/abstract=1343669 or http://dx.doi.org/10.2139/ssrn.1343669

Alessandro Carretta

University of Rome, Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Vincenzo Farina (Contact Author)

University of Rome, Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy
+390672595433 (Phone)
+39062040219 (Fax)

HOME PAGE: http://www.economia.uniroma2.it/nuovo/facolta/docenti/docenti.asp?IdProfessore=285

University of Rome, Tor Vergata - Department of Financial and Quantitative Economics ( email )

Via Columbia n.2
Roma, 00133
Italy

Paola Schwizer

University of Parma ( email )

Via J.F. Kennedy 6
Parma, 43100
Italy

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