Corporate Performance, Board Structure and its Determinants in the Banking Industry

42 Pages Posted: 20 Jun 2005

See all articles by Renee B. Adams

Renee B. Adams

University of Oxford; ABFER

Hamid Mehran

Independent

Date Written: August 8, 2005

Abstract

We examine the relation between board structure (size and composition) and firm performance using a sample of banking firms during 1959-1999. Contrary to the evidence for non-financial firms, we find that banking firms with larger boards do not underperform their peers in terms of Tobin's Q. We argue that M&A activity and features of the bank holding company organizational form may make a larger board more desirable for these firms and document that board size is significantly related to characteristics of our sample firms' structures. Even after accounting for these potential sources of endogeneity, we do not find a negative relationship between board size and Tobin's Q. Our findings suggest that constraints on board size in the banking industry may be counter-productive.

Keywords: Corporate Governance, Board Structure, Banking Industry, Holding Company, Organizational Form

JEL Classification: G34, G21,J41, L22

Suggested Citation

Adams, Renée B. and Mehran, Hamid, Corporate Performance, Board Structure and its Determinants in the Banking Industry (August 8, 2005). EFA 2005 Moscow Meetings. Available at SSRN: https://ssrn.com/abstract=302593 or http://dx.doi.org/10.2139/ssrn.302593

Renée B. Adams (Contact Author)

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

ABFER

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Hamid Mehran

Independent ( email )

No Address Available

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