Sitting on the Fence: Does Having a "Dual-Director" Add to Bank Profitability?

P. Savchenko and Maria Semenova
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P. Savchenko: Lund University, Lund, Sweden

Journal of the New Economic Association, 2013, vol. 20, issue 4, 12-32

Abstract: This paper investigates how the combination of positions of the Board of Directors and management affects bank's profitability. We use the 2010 bank-level data from 112 countries. Our results show that the positions' combination reduces banks' ROE. However, for banks in developing countries, the influence is close to zero and even positive for some specifications. We also show that the higher is the proportion of the Board members, who also hold a managerial position the lower is the profitability of a bank. This effect is, however, close to zero for banks in the developing countries. Thus, the corporate governance regulation should go beyond a simple restriction on holding simultaneously the CEO and the head of Board of Directors positions. The exception should be made for the developing countries, where the additional restrictions are not necessary.

Keywords: banks; ROE; corporate governance (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
Date: 2013
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http://www.econorus.org/repec/journl/2013-20-12-32r.pdf (application/pdf)

Related works:
Journal Article: Sitting on the fence: does having a 'dual-director' add to bank profitability? (2015)
Working Paper: Sitting on the fence: does having a ‘dual-director’ add to bank profitability? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2013:i:20:p:12-32

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