The Relationship Between Board Characteristics and Performance of Bank Holding Companies: Before and During the Financial Crisis

Journal of Economics & Finance. Jul 2016, Vol. 40 Issue 3, p. 438-471

Posted: 7 Nov 2018

See all articles by Jennifer O’Sullivan

Jennifer O’Sullivan

Southern University at New Orleans - College of Busines and Public Administration

Abdullah Mamun

University of Saskatchewan - Department of Finance and Management Science

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Date Written: 2015

Abstract

We examine the relationship between performance of the bank holding company and several board characteristics. We find that board size, CEO tenure and board tenure enhance bank performance. However, we find no evidence that board structure or CEO power influences bank performance. More importantly, we show that the effect of board characteristics during the crisis is quite different. During the crisis, board size has a negative effect on Tobin’s Q and the non-performing asset ratio, which supports Jensen’s (1993) argument that large boards are less likely to function effectively. Further, we report that the non-performing asset ratio decreases with board independence during the crisis.

Keywords: Board Characteristics, Bank Performance, Financial Crisis

JEL Classification: G34, G21, G28

Suggested Citation

O’Sullivan, Jennifer and Mamun, Abdullah and Hassan, M. Kabir, The Relationship Between Board Characteristics and Performance of Bank Holding Companies: Before and During the Financial Crisis (2015). Journal of Economics & Finance. Jul 2016, Vol. 40 Issue 3, p. 438-471, Available at SSRN: https://ssrn.com/abstract=3264370

Jennifer O’Sullivan

Southern University at New Orleans - College of Busines and Public Administration ( email )

New Orleans, LA
United States

Abdullah Mamun

University of Saskatchewan - Department of Finance and Management Science ( email )

College of Commerce
Saskatoon, Saskatchewan S7N 5A7
Canada
306 966 1862 (Phone)
306 966 2515 (Fax)

HOME PAGE: http://www.commerce.usask.ca/faculty/mamun/

M. Kabir Hassan (Contact Author)

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

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