Chair-CEO Generation Gap and Bank Risk-Taking

35 Pages Posted: 5 Jan 2017  

Yifan Zhou

University of Hull

Alper Kara

University of Huddersfield

Philip Molyneux

University of Sharjah - College of Business Administration

Date Written: January 2, 2017

Abstract

Chair-CEO age differences have been shown to create cognitive conflicts that lead to greater chair independence in board monitoring that results in superior firm performance (Goergen et al., 2015). We test this argument in a banking setting and investigate whether chair-CEO age difference influences bank risk-taking behaviour. Using a unique sample of the largest 96 listed banks in Europe between 2010 and 2014, we find that a chair-CEO generational gap – defined as a minimum of 20 years age difference – reduces bank risks. Our results are especially prevalent for loan portfolio risks. We do not find chair-CEO differences in gender and past experience to be significant determinants of bank riskiness.

Keywords: Chair-CEO relation, generational gap, age difference, cognitive conflict, bank risk-taking, European banks

JEL Classification: G3, G21, G28, G39

Suggested Citation

Zhou, Yifan and Kara, Alper and Molyneux, Philip, Chair-CEO Generation Gap and Bank Risk-Taking (January 2, 2017). Available at SSRN: https://ssrn.com/abstract=2892649 or http://dx.doi.org/10.2139/ssrn.2892649

Yifan Zhou (Contact Author)

University of Hull ( email )

Cottingham Road
Hull, Great Britain HU6 7RX
United Kingdom

Alper Kara

University of Huddersfield ( email )

Philip Molyneux

University of Sharjah - College of Business Administration ( email )

University City Road
Sharjah, 27272
United Arab Emirates

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