 Independent directors’ legal expertise, bank risk-taking and performanceGuoping Liu and Jerry Sun Journal of Contemporary Accounting and Economics, 2021, vol. 17, issue 1 Abstract: This study examines whether independent directors’ legal expertise affects bank risk-taking and performance. Using a sample of U.S. banks, we document that the proportion of legal experts among independent directors is negatively related to total risk and systematic risk, suggesting that legal experts are more effective in constraining bank risk-taking activities than other independent directors. In addition, this effect of legal expertise is more pronounced for banks with high CEO risk-taking incentives. We also find that independent directors’ legal expertise is negatively associated with Tobin’s q, in contrast to the notion that legal expertise can enhance bank performance. Overall, our findings suggest that legal experts among independent directors play a more effective role in the oversight of bank risk-taking than other directors; however, the mitigation of risk-taking does not necessarily improve bank performance. Keywords: Banks; Directors; Legal expertise; Risk-taking; Performance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:17:y:2021:i:1:s1815566920300540 DOI: 10.1016/j.jcae.2020.100240 Access Statistics for this article Journal of Contemporary Accounting and Economics is currently edited by Agnes C.S. Cheng, P. Clarkson, F.A. Gul, Zoltan Matolcsy, Dan Simunic and Ben Srinidhi More articles in Journal of Contemporary Accounting and Economics from Elsevier |
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