The Reverse Revolving Door in the Supervision of European Banks
Stefano Colonnello, Michael Koetter, Alex Sclip, Konstantin Wagner
IWH Discussion Papers,
No. 25,
2023
Abstract
We show that around one third of executive directors on the boards of national supervisory authorities (NSA) in European banking have an employment history in the financial industry. The appointment of executives without a finance background associates with negative valuation effects. Appointments of former bankers, in turn, spark positive stock market reactions. This „proximity premium“ of supervised banks is a more likely driver of positive valuation effects than superior financial expertise or intrinsic skills of former executives from the financial industry. Prior to the inception of the European Single Supervisory Mechanism, the presence of former financial industry executives on the board of NSA associates with lower regulatory capital and faster growth of banks, pointing to a more lenient supervisory style.
Read article
Alumni
IWH Alumni The IWH maintains contact with its former employees worldwide. We involve our alumni in our work and keep them informed, for example, with a newsletter. We also plan…
See page
Common Venture Capital Investors and Startup Growth
Ofer Eldar, Jillian Grennan
Review of Financial Studies,
No. 2,
2023
Abstract
We exploit the staggered introduction of liability waivers when investors hold stakes in conflicting business opportunities as a shock to venture capital (VC) investment and director networks. After the law changes, we find increases in within-industry VC investment and common directors serving on startup boards. Despite the potential for rent extraction, same-industry startups inside VC portfolios benefit by raising more capital, failing less, and exiting more successfully. VC directors serving on other startup boards are the primary mechanism associated with positive outcomes, consistent with common VC investment facilitating informational exchanges in VC portfolios.
Read article
Standards
Achieving Scientific Quality and Meeting Social Standards In order to secure the highest standards, the courses and the research projects will be evaluated. Evaluations form the…
See page
MULTIMSPROD/MULTIMSPROD AUT
MULTIMSPROD/MULTIMSPROD AUT MULTIMSPROD = Enhancing the Micro Foundation of the Research Output of National Productivity Board (NPBs). Using CompNet and Expanding its Micro Data…
See page
Contact
Contact Get a quick overview of how to reach us and whom to contact: Postal Address: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association P.O. Box 11 03…
See page
Standards
Achieving Scientific Quality and Meeting Social Standards In order to secure the highest standards, the courses and the research projects will be evaluated. Evaluations form the…
See page
Cultural Values of Parent Bank Board Members and Lending by Foreign Subsidiaries: The Moderating Role of Personal Traits
Iftekhar Hasan, Krzysztof Jackowicz, Oskar Kowalewski, Łukasz Kozłowski
Journal of International Financial Markets, Institutions and Money,
March
2023
Abstract
In this study, we investigate whether the cultural values of a parent bank’s board members affect lending by the bank’s foreign subsidiaries and how this influence is moderated by the board members’ personal traits. Using a new dataset on foreign-owned banks and their parent companies, we find that average individualism, uncertainty avoidance, and indulgence within parent bank boards significantly impact lending by foreign subsidiaries. We establish that different sensitivities of female and male directors modify the relevance of individual cultural dimensions in lending by foreign bank subsidiaries. Moreover, we show that parent bank directors’ cultural values have a stronger impact on lending by the bank’s foreign subsidiaries when those directors have enough time to fulfill their duties and possess higher ownership stakes in the parent companies.
Read article
The Value of Firm Networks: A Natural Experiment on Board Connections
Ester Faia, Maximilian Mayer, Vincenzo Pezone
SAFE Working Papers,
No. 269,
2022
Abstract
We present causal evidence on the effect of boardroom networks on firm value and compensation policies. We exploit a ban on interlocking directorates of Italian financial and insurance companies as exogenous variation and show that firms that lose centrality in the network experience negative abnormal returns around the announcement date. The key driver of our results is the role of boardroom connections in reducing asymmetric information. The complementarities with the input-output and cross-ownership networks are consistent with this channel. Using hand-collected data, we also show that network centrality has a positive effect on directors’ compensation, providing evidence of rent sharing.
Read article
Military Directors, Governance and Firm Behavior
Chen Cai, Iftekhar Hasan, Yinjie (Victor) Shen, Shuai Wang
Advances in Accounting,
December
2021
Abstract
We build a large dataset of board of directors with military experience and document a substantial and persistent presence of independent military directors serving on corporate boards. We find that firms with independent military directors are associated with better monitoring outcomes, including less excessive CEO compensation, greater forced CEO turnover–performance sensitivity, and less earnings management.
Read article
