XXV Edition

1-2 December 2016"

The Impact of Independent and ‘‘Busy” Board Directors on Risk and Shareholder Value of US Complex Bank Holding Companies

Deglinnocenti Marta, University of Southampton

We investigate how the "busyness" and proportion of independent and expert board of directors affect the risk and shareholder value of US complex bank holding companies over the period 2007-2014. Using difference-in-difference estimations, we demonstrate that US complex bank holding companies that result in a higher proportion of independent directors are more stable but at the same time experience a decrease in their shareholder value. Our findings also show that the "busyness" of executive directors decreases both the stability and the shareholder value of BHCs. Finally, we find that the 2010 Dodd-Frank Act appears to have amplified the effect of the ‘‘busyness” of executive directors on BHCs’ risk. Our results are consistent with several robustness checks.

Area: Banking

Keywords: Bank Holding Companies, Busy Directors, Independent Directors, Risk, Shareholder Value

Paper file

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