61 Pages Posted: 8 Oct 2015 Last revised: 16 Jun 2017
Date Written: June 12, 2017
We show that compensation and other manager characteristics that attract public scrutiny in the banking industry only account for a small amount of heterogeneity in bank business models. Instead, idiosyncratic manager-specific effects (or ‘styles’) explain substantial differences in policy choices, risk and performance across banks. We combine manager styles and derive manager profiles that also reflect managers’ personal risk preferences, predict whether managers will be appointed as CEO, and match managers with boards based on risk appetite. Our results suggest that attempts to rein in bank risk-taking by targeting readily observable manager characteristics will be extremely challenging.
Keywords: Banks, managerial style, corporate governance, risk
JEL Classification: G21, G32, G34
Suggested Citation: Suggested Citation
Hagendorff, Jens and Saunders, Anthony and Steffen, Sascha and Vallascas, Francesco, The Wolves of Wall Street: Managerial Attributes and Bank Business Models (June 12, 2017). Available at SSRN: https://ssrn.com/abstract=2670525 or http://dx.doi.org/10.2139/ssrn.2670525