Who Disciplines Bank Managers?

50 Pages Posted: 30 Mar 2009

See all articles by Martin Čihák

Martin Čihák

International Monetary Fund (IMF)

Andrea Michaela Maechler

International Monetary Fund (IMF)

Klaus Schaeck

University of Bristol

Stéphanie Stolz

International Monetary Fund (IMF); European Central Bank (ECB)

Multiple version iconThere are 3 versions of this paper

Date Written: 2009

Abstract

We bring to bear a hand-collected dataset of executive turnovers in U.S. banks to test the efficacy of market discipline in a „laboratory setting‟ by analyzing banks that are less likely to be subject to government support. Specifically, we focus on a new face of market discipline: stakeholders‟ ability to fire an executive. Using conditional logit regressions to examine the roles of debtholders, shareholders, and regulators in removing executives, we present novel evidence that executives are more likely to be dismissed if their bank is risky, incurs losses, cuts dividends, has a high charter value, and holds high levels of subordinated debt. We only find limited evidence that forced turnovers improve bank performance.

Keywords: Market discipline, executive turnover, financial soundness, corporate governance

JEL Classification: G21, G28

Suggested Citation

Cihak, Martin and Maechler, Andrea Michaela and Schaeck, Klaus and Stolz, Stephanie, Who Disciplines Bank Managers? (2009). AFA 2010 Atlanta Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1360520 or http://dx.doi.org/10.2139/ssrn.1360520

Martin Cihak

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Andrea Michaela Maechler (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Klaus Schaeck

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Stephanie Stolz

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
278
Abstract Views
1,556
rank
47,559
PlumX Metrics