Mamatzakis, Emmanuel and Bermpei, Theodora (2015) The effect of corporate governance on the performance of US investment banks. Financial Markets, Institutions And Instruments, 24 (2-3). pp. 191-239. ISSN 0963-8008

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Abstract

This paper focuses on the impact of the corporate governance, using a plethora of measures,
on the performance of the US investment banks over the 2000–2012 period. This time period offers a unique set of information, related to the credit crunch, that we model using a dynamic panel threshold analysis to reveal new insights into the relationship between
corporate governance and bank performance. Results show that the board size asserts a negative effect on performance consistent with the ‘agency cost
’ hypothesis, particularly for banks with board size higher than ten members. Threshold analysis reveals that in the post-crisis period most of investment banks opt for boards with less than ten members, aiming to
decrease agency conflicts that large boards suffer from. We also find a negative association between the operational complexity and performance. Moreover, the CEO power asserts a positive effect on performance consistent with the ‘
stewardship ’ hypothesis. In addition, an
increase in the bank ownership held by the board has a negative impact on performance for
banks below a certain threshold. On the other hand, for banks with board ownership above the threshold value this effect turns positive, indicating an alignment between shareholders’ and managers’ incentives.

Item Type:	Article
Schools and Departments:	School of Business, Management and Economics > Business and Management
Subjects:	H Social Sciences > HG Finance
Depositing User:	Emmanuel Mamatzakis
Date Deposited:	25 Aug 2015 11:35
Last Modified:	04 Sep 2017 23:34
URI:	http://srodev.sussex.ac.uk/id/eprint/56250

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