Taking the lord's name in vain: The impact of connected directors on 19th century British banks

Richard Grossman and Masami Imai

Explorations in Economic History, 2016, vol. 59, issue C, 75-93

Abstract: This paper utilizes data on the presence of prominent individuals – that is, those with political (e.g., Members of Parliament) and aristocratic titles (e.g., lords) – on the boards of directors of English and Welsh banks from 1879 to 1909 to investigate whether the appointment of well-connected directors enhanced equity value for bank shareholders. Our analysis of panel data shows that the appointment of connected directors did not increase equity returns (as measured by the capital gain plus dividend yield on bank shares). In fact, we find that the appointment of MPs to directorships had negative effects on bank equity returns. Our event-study analysis corroborates this finding, showing that a bank's shares exhibited negative abnormal returns when their directors were elected to Parliament. Taken together, our results indicate that connected directors yielded little – or even negative – economic payoff to bank shareholders in pre-war Britain.

Keywords: Banks; Corporate governance; Britain; 19th century; 20th century (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014498315000431
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th century British Banks (2015)
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th Century British Banks (2014)
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th century British Banks (2014)
Working Paper: Taking the Lord’s Name in Vain: The Impact of Connected Directors on 19th century British Banks (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:59:y:2016:i:c:p:75-93

DOI: 10.1016/j.eeh.2015.10.002

Access Statistics for this article

Explorations in Economic History is currently edited by R.H. Steckel

More articles in Explorations in Economic History from Elsevier
Bibliographic data for series maintained by Catherine Liu ().