The Wolves of Wall Street: Managerial Attributes and Bank Business Models

61 Pages Posted: 8 Oct 2015 Last revised: 16 Nov 2016

Jens Hagendorff

Cardiff University - Cardiff Business School

Anthony Saunders

New York University - Leonard N. Stern School of Business

Sascha Steffen

University of Mannheim - Business School; Centre for European Economic Research (ZEW)

Francesco Vallascas

University of Leeds - Division of Accounting and Finance

Date Written: November 15, 2016

Abstract

We investigate the role of executive-specific attributes in explaining bank business models beyond pay-per-performance incentives. We decompose the variation in business models and show that idiosyncratic manager-specific effects (or ‘styles’) of members of a bank’s top management team are reflected in key bank policy choices. Manager styles far outrank executive compensation and other observable manager variables in terms of their ability to describe variation in bank business models. Bank manager styles also explain differences in risk and performance across banks, including cross-sectional variation in bank risk during the global financial crisis. Finally, we combine manager styles from various bank policies to derive manager profiles that are associated with managers’ personal risk preferences, board characteristics and whether or not managers will be appointed as CEO during their careers.

Keywords: Banks, managerial style, corporate governance, risk

JEL Classification: G21, G32, G34

Suggested Citation

Hagendorff, Jens and Saunders, Anthony and Steffen, Sascha and Vallascas, Francesco, The Wolves of Wall Street: Managerial Attributes and Bank Business Models (November 15, 2016). 2nd Annual Financial Institutions, Regulation and Corporate Governance Conference. Available at SSRN: https://ssrn.com/abstract=2670525 or http://dx.doi.org/10.2139/ssrn.2670525

Jens Hagendorff (Contact Author)

Cardiff University - Cardiff Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

Anthony Saunders

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

Sascha Steffen

University of Mannheim - Business School ( email )

L9, 1-2
Mannheim, 68131
Germany

HOME PAGE: http://www.sascha-steffen.de

Centre for European Economic Research (ZEW) ( email )

L7, 1
Mannheim, 68161
Germany
+496211235140 (Phone)

Francesco Vallascas

University of Leeds - Division of Accounting and Finance ( email )

Leeds LS2 9JT
United Kingdom

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