The Financial Crisis, Internal Corporate Governance, and the Performance of Publicly-Traded U.S. Bank Holding Companies
47 Pages Posted: 22 Sep 2009 Last revised: 26 Jan 2010
Date Written: January 22, 2009
We look at internal corporate governance mechanisms and the performance of publicly-traded U.S. banks before and during the financial crisis. Obviously, bank performance decreases dramatically during the crisis. This decrease occurs for all bank size groups. However, the largest banks see the largest losses. We find several measures of corporate governance, particularly CEO pay-for-performance sensitivity, executive ownership, and affiliated director ownership, decrease significantly just before and during the crisis. Large banks experience the largest changes in corporate governance. Finally, we find stronger relations between corporate governance variable changes and 2008 stock market returns for large banks than for small banks.
Keywords: Corporate governance, financial performance, financial institutions
JEL Classification: G21, G30, G34
Suggested Citation: Suggested Citation