The Effect of Corporate Governance on the Performance of US Investment Banks

Mamatzakis, Emmanuel; Bermpei, Theodora

doi:10.1111/fmii.12028

Cited by 42 publications

(30 citation statements)

References 186 publications

(336 reference statements)

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“…However, Byrd et al () present empirical evidence that the presence of duality for a sample of US thrifts was related to lower failure rates, on average, during the 1980s. This latter result resonates with Mamatzakis and Bermpei () who finds duality has a significant and positive result on performance, which chimes with stewardship theories of corporate governance that indicate that a powerful CEO serves as a prudent steward of the firm's asset base and risk profile (Donaldson & Davis, ). CEO duality information is collected from BoardEx.…”

Section: Empirical Analysissupporting

confidence: 75%

“…Notable studies find a complex relation between board size and performance, where larger boards improve performance to a certain extent before tapering off in an inverted U shape function (de Andres & Valleldo, 2008). Mamatzakis and Bermpei (2015) find that investment bank board size is robustly and negatively related to bank performance, supporting the agency-costs hypothesis. Aebi, Sabato, and Schmid (2012) posit that board size, as a corporate governance mechanism, may be substituted by external monitoring, possibly explaining the variety of findings in the literature.…”

Section: Other Corporate Governance Characteristicssupporting

confidence: 57%

“…Mamatzakis and Bermpei () find that investment bank board size is robustly and negatively related to bank performance, supporting the agency‐costs hypothesis. Aebi, Sabato, and Schmid () posit that board size, as a corporate governance mechanism, may be substituted by external monitoring, possibly explaining the variety of findings in the literature.…”

Section: Literature Reviewmentioning

confidence: 82%

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Risk governance: Examining its impact upon bank performance and risk‐taking

Gontarek

Belghitar

2018

Financial Market

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As policy‐makers in the United States contemplate a relaxation of financial regulation, our study contributes to this dialogue by testing the veracity of heightened standards of risk governance activities for US bank holding companies (BHCs). Our study examines evidence relating to the adoption of these standards by BHCs following regulatory intervention. We find that board‐level risk appetite practices have a profound association upon BHC performance and tail risk. Our estimates show that BHCs which adopt risk appetite practices exhibit a significant improvement in headline performance and reduced tail risk measures. Our research is relevant to academics by identifying the significance of this risk governance practice which has been introduced by global regulators. For practitioners (including board members, risk managers, policy‐makers and regulators), our study validates the efficacy of risk appetite frameworks as the future shape of financial regulation is being actively debated in the US.

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Section: Empirical Analysissupporting

confidence: 75%

Section: Other Corporate Governance Characteristicssupporting

confidence: 57%

Section: Literature Reviewmentioning

confidence: 82%

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Risk governance: Examining its impact upon bank performance and risk‐taking

Gontarek

Belghitar

2018

Financial Market

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“…Human capital is highly significant to IBs, as these financial institutions are unique and differ fundamentally from their conventional counterparts, which are mainly focused on profit maximisation through the spread between the interest rates (i.e., interest rate received from the capital borrowers and interest rate paid to the depositors) (Mamatzakis and Bermpei, 2015). Conversely, IBs focus primarily on non-interest income activities such as investments in various Shariah-compliant projects to earn profit.…”

Section: Introductionmentioning

confidence: 99%

Exploring the Nexus Between Human Capital, Corporate Governance and Performance: Evidence from Islamic Banks

2017

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This paper offers novel insight into the Islamic banking business model by considering the effect of investments in human capital and corporate governance features on the market performance of Islamic banks. Based on a sample of 47 banks (30 full-fledged Islamic banks and 17 Islamic Shariah-windows) operating in different regions during the 2005-2010 period, and controlling for firm-specific characteristics, this paper finds investments in human capital to have a significant positive impact on the market value in the pre-and post-financial crisis period. Based on a market measure, this paper finds board size and CEO power to have a significant positive impact, while the size of Shariah Supervisory Board (SSB) has the opposite effect on market performance. The results further reveal that the Islamic banking sector is not a homogeneous group, with full-fledged Islamic banks having lax corporate governance mechanisms and large size, while their counterparts, Islamic Shariah-windows, having strong corporate governance mechanisms tend to invest more in human capital to yield positive market value. Overall, the analysis suggests that the financial crisis may have further spurred the impact of investments in human capital on the market performance.

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“…Several confounding studies relating to board size and financial performance have been carried out around the globe. Mamatzakis and Bermpei (2015) found board size to have a negative influence on firm performance. Yasser, Entebang and Mansor (2015) posit that due to agency problems, board size had been expanded to Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697(Paper) ISSN 2222-2847(Online) Vol.10, No.24, 2019 incorporate a variety of expertise and interest groups.…”

Section: Review Of Theory Literature and Hypothesis Developmentmentioning

confidence: 99%

Board Size and Financial Performance of Commercial Banks in Kenya

Manyaga¹,

Muturi²,

Oluoch³

2019

RJFA

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Board of directors are individuals appointed to oversee the operations of the firm by shareholders. They ensure that operations of the firm are carried out in a more effective manner. Board size as part of board characteristics contributes positively to the firm's financial performance. Due to agency problems, board size had been expanded to incorporate a variety of expertise and interest groups. However, there is no one board size fit all, the size is determined by the industry and the country of operation. Begging the need for examination of the influence of board size on return on equity of commercial banks operating in Kenya. The target population was 43 commercial banks in operation in Kenya as at 31st December 2017. Secondary data on board size as independent variable and return on equity as a dependent variable for 34 commercial banks for the years 2008 to 2017 was obtained from the internet and perusal of the annual accounts of the individual commercial banks. The study adopted causal research design. Using STATA Version 13 to analyse data, the study used2W both descriptive and inferential statistics. Based on the analysis, the study concluded that overall, board size had a negative but significant influence on return on equity on commercial banks in Kenya. The study also found that board size had a positive and significant influence on return on equity across time. However, in regard to time, board size had a negative but significant variability on return on equity across time. In the case of across banks, board size had a negative but significant influence on return on equity across banks. In consideration of the individual banks, board size had a positive and significant variability on return on equity across banks. The third aspect of groupings, board size had insignificant influence on return on equity across peer. While on individual groups, board size had a positive and significant variability on return on equity across peer. The study recommended a board size of between 6 and 10 board members to embrace a mixture which caters for various interests to facilitate better financial performance.

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The Effect of Corporate Governance on the Performance of US Investment Banks

Cited by 42 publications

References 186 publications

Risk governance: Examining its impact upon bank performance and risk‐taking

Risk governance: Examining its impact upon bank performance and risk‐taking

Exploring the Nexus Between Human Capital, Corporate Governance and Performance: Evidence from Islamic Banks

Board Size and Financial Performance of Commercial Banks in Kenya

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