Connections and performance in bankers’ turnover

Battistin, Erich; Graziano, Clara; Parigi, Bruno Maria

doi:10.1016/j.euroecorev.2011.11.006

Cited by 20 publications

(15 citation statements)

References 34 publications

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“…To explain these findings, we investigated the effect of board turnover as a potential mediating variable in the relationship between the cooperative bank model and board deficiencies. Consistent with the previous literature, our results show that in cooperatives, board turnover is lower than in joint‐stock banks (Battistin et al, ). Additionally, our research contributes to the literature by demonstrating the existence of a partial but significant mediating effect of board turnover on the relationship between the cooperative model and board deficiency.…”

Section: Discussionmentioning

confidence: 99%

Does Bank Institutional Setting Affect Board Effectiveness? Evidence from Cooperative and Joint‐Stock Banks

D’Amato

Gallo

2016

Corporate Governance

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Manuscript Type Empirical Research Question/Issue Do cooperative banks suffer from board deficiencies less frequently and severely than joint‐stock banks? To answer this question, we analyze banks operating in Italy during the period 2006–2012 to examine whether the governing bodies of cooperative banks are less effective in carrying out their duties than those of joint‐stock banks. Deficiencies in the governing body are measured by sanctions imposed by the supervisory authority. Research Findings/Insights Findings revealed that the boards of directors of cooperative banks were sanctioned more often than board of directors of joint‐stock banks. Furthermore, board turnover mediates the relationship between the cooperative status and board deficiencies. Theoretical/Academic Implications This study provides empirical evidence in support of the weakness of corporate governance in cooperative banks. Methodologically, our approach is novel in that we adopt a measure of board effectiveness/deficiency based on an independent third‐party perspective (supervisory authority) that is not biased by the different objective function of the two types of banks. Practitioner/Policy Implications The findings have several policy and managerial implications. We contribute to the ongoing debate on the proposal for flexible regulation of corporate governance for cooperative banks and emphasize that policy‐makers and regulators should rethink the corporate governance structures of cooperative banks. In particular, the study reveals how board turnover should be carefully monitored to reduce board deficiencies at the bank level.

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Section: Discussionmentioning

confidence: 99%

Does Bank Institutional Setting Affect Board Effectiveness? Evidence from Cooperative and Joint‐Stock Banks

D’Amato

Gallo

2016

Corporate Governance

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“…Such effects may arise due to reduced ability to interact with customers, impediments in transferring efficiencies to distant branches, and the difficult of communicating softer information to bank headquarters. Social and business connections of a community nature, measured by distance between capital city of birth and province of bank headquarters, amongst bank executives may reduce turnover and act as collusion devices to maintain rents at the expense of performance (Battistin et al 2012). …”

Section: Geography and Distancementioning

confidence: 99%

“…Functional distance involves the distance between the locus of lending decisions and local branches and their borrowers (Alessandrini et al 2009;Liberti and Mian 2009). Geographic distance focuses on the physical distance between the lending bank and borrower (Knyazeva and Knyazeva 2012;Battistin et al 2012;Degryse and Ongena 2005).…”

Section: Geography and Distancementioning

confidence: 99%

“…Bank distance (Mian 2006;Berger et al 2001) may be influenced by local knowledge as the relational assets associated with such knowledge could erode the farther banks and firms become separate from one another. The utility of bank connections (Battistin et al 2012) and associated network effects can be improved through the acquisition of local knowledge that such social networks enable. The differential performance of bank size may also be better understood as it is smaller banks that depend more on soft information and personal relationships that local knowledge can facilitate and amplify (Berger et al 2005).…”

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confidence: 99%

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The Impact of Local Knowledge on Banking

Bird

Knopf

2014

J Financ Serv Res

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We use firm-level data to study how local knowledge impacts the wage and profitability of commercial banks. Using a novel regulatory and competitive environment as a natural experiment, we find that restrictions on the mobility of local knowledge negatively impact the incidence of new bank charters. Also consistent with expected theory, we also find no impact on banks formed through mergers or acquisition where the acquiring bank can simply purchase the local knowledge available. We also find that restrictions on the mobility of local knowledge decrease labor expenses. This supports the hypothesis that such mobility restrictions enable employers to extract rents from workers who lack bargaining power arising from a potential job change to a local rival. We also find that increases in labor restrictions are positively correlated with profitability, benefiting established banks because it restricts competitive with potential new banks that could potentially exploit local knowledge more effectively.

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“…13 Kramarz and Thesmar (2013) show that networking determines board composition in France, that networked CEOs have higher incomes and that networks within the board reduce its efficiency. Battistin, Graziano and Parigi (2012) investigate the role of local connections on turnover and performance of Italian banks. Connections reduce turnover, attenuate the relation between performance and turnover, and worsen the performance of mutual, cooperative and local banks.…”

Section: Inefficiency Of the Supervisory Boardmentioning

confidence: 99%

Does Codetermination Affect the Composition of Variable Versus Fixed Parts of Executive Compensation?

Dyballa

Kraft

2015

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Does Codetermination Affect the Composition of Variable Versus Fixed Parts of Executive Compensation? -An Empirical Analysis for Listed Companies in GermanyKatharina Dyballa ** and Kornelius Kraft *** June 2015 AbstractContrary to previous literature we hypothesize that interests of labor may welllike that of shareholders -aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid excessive risk taking and short-run orientated decisions. We compile unique panel data on executive compensation over the periods 2006 to 2011 for 405 listed companies and use a Hausman-Taylor approach to estimate the effect of codetermination on the compensation design. Finally, codetermination has a significantly positive effect on performance-based components of compensation, which supports our hypothesis. JEL-Codes: J52; L20; G32; M12; C33Key words: Executive Compensation, Codetermination, Principal-Agent Theory, Corporate Governance, Hausman-Taylor Acknowledgements: We are very grateful to the Kienbaum Consulting AG for the kind provision of extensive data on management compensation. We should also like to thank the Hans Böckler Stiftung for kindly providing information on coverage of German firms by codetermination. We also thank the Deutsche Forschungsgemeinschaft for financial support via SFB 823 "Statistical modelling of nonlinear dynamic processes".

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Connections and performance in bankers’ turnover

Cited by 20 publications

References 34 publications

Does Bank Institutional Setting Affect Board Effectiveness? Evidence from Cooperative and Joint‐Stock Banks

Does Bank Institutional Setting Affect Board Effectiveness? Evidence from Cooperative and Joint‐Stock Banks

The Impact of Local Knowledge on Banking

Does Codetermination Affect the Composition of Variable Versus Fixed Parts of Executive Compensation?

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