Turnover threat and CEO risk-taking behavior in the banking industry
Zhongdong Chen and
Journal of Banking & Finance, 2018, vol. 96, issue C, 87-105
We examine how the threat of turnover affects bank CEOs' risk-taking behavior. Using a sample of 212 U.S. banks from 1995 to 2010, in contrast with prior studies focusing on non-banking firms, we find a non-monotonic relationship between CEO turnover threat and CEO risk-taking behavior in the banking industry. Bank CEOs increase their risk-taking when the perceived turnover threat is moderate but reduce risk-taking when turnover threat is more imminent. This effect tends to concentrate on banks with a majority of independent directors.
Keywords: CEO risk-taking; CEO turnover; Board independence (search for similar items in EconPapers)
JEL-codes: G21 G30 J33 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:96:y:2018:i:c:p:87-105
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