Deregulation and Board Policies: Evidence from Performance Measures Used in Bank CEO Turnover Decisions

49 Pages Posted: 11 Jan 2019

See all articles by Rachel M. Hayes

Rachel M. Hayes

University of Utah - David Eccles School of Business

Xiaoli (Shaolee) Tian

Georgetown University - Department of Accounting and Business Law

Xue Wang

Ohio State University - Fisher College of Business

Date Written: December 2019

Abstract

The financial crisis has led to renewed interest in the effects of deregulation on bank governance and incentives provided to bank CEOs. We examine the relation between bank CEO turnover and performance, and whether this relation has been affected by banking deregulation. We find that bank CEO turnover is more (less) sensitive to stock (accounting) performance in the post-deregulation period. We also find that such changes in turnover-performance sensitivity primarily exist in large banks, which are best positioned to exploit growth opportunities, and in banks that expand geographically after deregulation. Our results indicate an increased (decreased) emphasis on stock (accounting) performance in turnover decisions when competition and growth opportunities are greater in the deregulated environment. The findings provide evidence that the information used in board decisions varies with features of the competitive environment.

Keywords: CEO Turnover, Deregulation, Growth

JEL Classification: G21, G30

Suggested Citation

Hayes, Rachel M. and Tian, Xiaoli (Shaolee) and Wang, Xue, Deregulation and Board Policies: Evidence from Performance Measures Used in Bank CEO Turnover Decisions (December 2019). Georgetown McDonough School of Business Research Paper No. 3312243. Available at SSRN: https://ssrn.com/abstract=3312243 or http://dx.doi.org/10.2139/ssrn.3312243

Rachel M. Hayes (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

Xiaoli (Shaolee) Tian

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Xue Wang

Ohio State University - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-688-1330 (Phone)
614-292-2118 (Fax)

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