Can bank boards prevent misconduct?

Duc Duy Nguyen, Jens Hagendorff, Arman Eshraghi

Research output: Contribution to journalArticlepeer-review

27 Citations (Scopus)
2 Downloads (Pure)

Abstract

We study regulatory enforcement actions issued against US banks to show that both board monitoring and advising are effective in preventing misconduct by banks. While better monitoring by boards prevents all categories of misconduct, better advising prevents misconduct of a technical nature. Board monitoring increases the likelihood that misconduct is detected, increases the penalties imposed on the CEO, and alleviates shareholder wealth losses following the detection of misconduct by regulators. Our article offers novel insights on how to structure bank boards to prevent bank misconduct.
Original languageEnglish
Pages (from-to)1-36
Number of pages36
JournalReview of Finance
Volume20
Issue number1
Early online date11 Apr 2015
DOIs
Publication statusPublished - Mar 2016

Keywords

  • Banks
  • Enforcement actions
  • Board monitoring
  • Board advising

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