Governance and the Financial Crisis

35 Pages Posted: 18 Oct 2011

Multiple version iconThere are 3 versions of this paper

Date Written: October 17, 2011


Should boards of financial firms be blamed for the financial crisis? Using a large sample of data on nonfinancial and financial firms for the period 1996-2007, I document that the governance of financial firms is, on average, not obviously worse than in nonfinancial firms. In fact, using simple governance scores and governance indices as measures, banks and nonbank financial firms generally appear to be better governed than nonfinancial firms. I also document that bank directors earned significantly less compensation than their counterparts in nonfinancial firms and banks receiving bailout money had boards that were more independent than in other banks. My results suggest that measures of governance that have been the focus of recent governance policies are insufficient to describe governance failures attributed to financial firms. Moreover, recent governance reforms may have to shoulder some of the blame placed on boards of financial firms.

Keywords: Financial Firms, Financial Crisis, Boards of Directors, Governance Codes, Governance Indices, Regulation

JEL Classification: G01, G20, G34, G38

Suggested Citation

Adams, Renée B., Governance and the Financial Crisis (October 17, 2011). Available at SSRN: or

Renée B. Adams (Contact Author)

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain


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