Board effectiveness in the European banking industry

Ilduara Busta and Bersant Hobdari

International Journal of Corporate Governance, 2015, vol. 6, issue 1, 25-41

Abstract: The existence of different optimal governance structures across industries is often cited as the reason for the lack of a significant relationship between firms' board of directors and financial performance. We provide evidence of the nature of the relationship between the size and independence of the board and directors and financial performance in banking by allowing for separate behaviours under different institutional settings. Using a panel dataset of listed banks in France, Germany, Italy, Spain and the UK, we show that banks with higher presence of non-executives in their boards perform better in Continental Europe, while the opposite is the case in the UK. Bank size though does not seem to impact bank performance.

Keywords: corporate governance; board size; board independence; banks; Europe; board effectiveness; banking industry; board of directors; firm performance; financial performance; France; Germany; Italy; Spain; UK; United Kingdom; non-executive directors; bank performance. (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcgov:v:6:y:2015:i:1:p:25-41

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