What About the Future of European Banks? Board Characteristics and ESG Impact

Securities Regulation Law Journal, vol. 47, n. 4, Winter 2019, 319-364

37 Pages Posted: 20 Dec 2019 Last revised: 28 Dec 2019

See all articles by Brando Maria Cremona

Brando Maria Cremona

Bocconi University, Angelo Sraffa Department of Legal Studies

Maria Lucia Passador

Bocconi University - Department of Law

Date Written: August 23, 2019

Abstract

In this article, in addition to understanding what are the elements and stages that have guided the formation of a corporate culture in the ESG area, we focus on two specificities: the distinctive traits of the board of directors, on the one hand, and the relationship between ESG performance and the financial performance/company value together with the number of M&A transactions undertaken in the banking sector, on the other hand.

In light of the above, the study first investigates the size of the board of directors to identify the key players and the attributes that each board member must possess to optimize ESG performance. This aim was accomplished by screening all European listed company reports and documents published in 2018.

Afterwards, on the basis of the results reached in the first round, the second stage scrutinises the banking sector to establish the extent to which ESG’s performance impacts on some key corporate factors (performance, firm value and M&A transactions).

This leads to some recommendations regarding the optimal board structure, its internal structure and the features that a target should have if it were involved in an M&A deal. But not only that. In conclusion, we also wonder, ending in a doubtful way, whether pursuing such purposes belongs to the corporate purpose and which are their implications and their impacts with respect to the duties entrusted to directors.

Keywords: corporate governance, boards of directors, ESG, ESG reporting, firm value, financial performance, M&A transactions, sustainable investment, institutional investors, engagement, corporate social responsibility, corporate sustainability, long-term investing, risk management

JEL Classification: G11, G23, G30, G34, M14, O16

Suggested Citation

Cremona, Brando Maria and Passador, Maria Lucia, What About the Future of European Banks? Board Characteristics and ESG Impact (August 23, 2019). Securities Regulation Law Journal, vol. 47, n. 4, Winter 2019, 319-364. Available at SSRN: https://ssrn.com/abstract=3441784

Brando Maria Cremona

Bocconi University, Angelo Sraffa Department of Legal Studies ( email )

Via Roentgen, 1
Milan, Milano 20136
Italy

Maria Lucia Passador (Contact Author)

Bocconi University - Department of Law ( email )

Via Roentgen, 1
Milan, Milan 20136
Italy

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