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

61 Pages Posted: 8 Oct 2015 Last revised: 16 Jun 2017

Jens Hagendorff

University of Edinburgh - Business School

Anthony Saunders

New York University - Leonard N. Stern School of Business

Sascha Steffen

Frankfurt School of Finance & Management

Francesco Vallascas

University of Leeds - Division of Accounting and Finance

Date Written: June 12, 2017

Abstract

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

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

Jens Hagendorff (Contact Author)

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
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

Frankfurt School of Finance & Management ( email )

Sonnemannstr. 9 -11
Frankfurt, 60314
Germany

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

Francesco Vallascas

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

Leeds LS2 9JT
United Kingdom

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