Board Diversity Reforms: Do They Matter for EU Bank Performance?

39 Pages Posted: 19 May 2020

See all articles by Francesca Arnaboldi

Francesca Arnaboldi

University of Milan

Barbara Casu

City University London - Sir John Cass Business School

Elena Kalotychou

Cass Business School, City, University of London

Anna Sarkisyan

University of Essex - Essex Business School

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Date Written: March 2020

Abstract

We examine the impact of governance reforms related to board diversity on the performance of European Union banks. Using a difference‐in‐difference approach, we document that reforms increase bank stock returns and their volatility within the first 3 years after their enactment. The type of reform matters, with quotas increasing return volatility. The effectiveness of reforms depends on a country's institutional environment. The impact of reforms on return volatility is found to be beneficial in countries more open to diversity, with common law system and with greater economic freedom. Finally, reforms play a bigger role in banks that have ex ante less heterogeneous boards.

Keywords: bank performance, board diversity reforms, corporate governance codes

Suggested Citation

Arnaboldi, Francesca and Casu, Barbara and Kalotychou, Elena and Sarkisyan, Anna, Board Diversity Reforms: Do They Matter for EU Bank Performance? (March 2020). European Financial Management, Vol. 26, Issue 2, pp. 416-454, 2020, Available at SSRN: https://ssrn.com/abstract=3600306 or http://dx.doi.org/10.1111/eufm.12238

Francesca Arnaboldi (Contact Author)

University of Milan ( email )

Via Festa del Perdono 7
Milan, 20122
Italy

Barbara Casu

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Elena Kalotychou

Cass Business School, City, University of London ( email )

106 Bunhill Row
London, EC1Y 8TZ
Great Britain

Anna Sarkisyan

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

HOME PAGE: http://www.essex.ac.uk/ebs/staff/profile.aspx?ID=2004

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