Taking the Lord’s Name in Vain: The Impact of Connected Directors on 19th century British Banks

Richard Grossman and Masami Imai

No 2014-004, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics

Abstract: This paper utilizes data on the presence of prominent individuals—that is, those with political (e.g., Members of Parliament) and aristocratic titles (e.g., lords)--on the boards of directors of English and Welsh banks from 1879-1909 to investigate whether the appointment of wellconnected directors enhanced equity value for bank shareholders. Our analysis of panel data shows that the appointment of connected directors did not increase the rate of return on bank equity. In fact, we find that the appointment of MPs to directorships had negative effects on bank equity returns. Our event-study analysis corroborates this finding, showing that a bank’s shares exhibited negative abnormal returns when their directors were elected to Parliament. Taken together, our results indicate that connected directors yielded little--or even negative--economic payoff to bank shareholders in pre-war Britain.

Pages: 40 pages
Date: 2014-10
New Economics Papers: this item is included in nep-his
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repec.wesleyan.edu/pdf/rgrossman/2014004_grossman.pdf (application/pdf)

Related works:
Journal Article: Taking the lord's name in vain: The impact of connected directors on 19th century British banks (2016)
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th century British Banks (2015)
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th Century British Banks (2014)
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th century British Banks (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wes:weswpa:2014-004

Access Statistics for this paper

More papers in Wesleyan Economics Working Papers from Wesleyan University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Manolis Kaparakis ().