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Bank CEO materialism: Risk controls, culture and tail risk

Robert M. Bushman, Robert H. Davidson, Aiyesha Dey and Abbie Smith

Journal of Accounting and Economics, 2018, vol. 65, issue 1, 191-220

Abstract: We investigate how the prevalence of materialistic bank CEOs has evolved over time, and how risk management policies, non-CEO executives’ behavior and tail risk vary with CEO materialism. We document that the proportion of banks run by materialistic CEOs increased significantly from 1994 to 2004, that the strength of risk management functions is significantly lower for banks with materialistic CEOs, and that non-CEO executives in banks with materialistic CEOs insider trade more aggressively around government intervention during the financial crisis. Finally, we find that banks with materialistic CEOs have significantly more downside tail risk relative to banks with non-materialistic CEOs.

Keywords: Executive materialism; Corporate culture; Bank risk (search for similar items in EconPapers)
JEL-codes: G01 G02 G18 G21 G32 G38 (search for similar items in EconPapers)
Date: 2018
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Journal of Accounting and Economics is currently edited by J. L. Zimmerman, S. P. Kothari, T. Z. Lys and R. L. Watts

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Handle: RePEc:eee:jaecon:v:65:y:2018:i:1:p:191-220