Corporate governance mechanisms and bank performance: evidence from the Greek banks during crisis period

Abstract

This paper is the first research attempt that investigates the impact of a large number of corporate governance mechanisms on the performance of Greek banks, employing widely accepted in the literature of corporate governance econometric models. Results indicate that system GMM models are more suitable methodological tools than pooled OLS and fixed effects models to address well-known econometric problems, such as endogeneity, simultaneity and unobserved heterogeneity of individual banks. The findings, as derived from the application of GMM models, imply that increasing the board size and the number of independent directors can both have positive impact on the performance of Greek banks, but only up to a certain point. Thus, bank efficiency will increase as board size and the proportion of independent directors grow up to a point where these relationships hit a maximum from which bank performance decreases. Our multi-model estimations failed to trace any significant contribution of the number of female and foreign directors on the performance of Greek banks. Finally, the dual appointment of a CEO as Chairman appears to affect negatively two out of four proxies of bank performance. Overall, the results provide support for the positive impact of corporate governance mechanisms on the performance of Greek banks. The significance of these findings increases, considering that the period under study (2008)(2009)(2010)(2011)(2012)(2013)(2014) is marked by high market volatility and uncertainty due to the well-known debt crisis that plagues Greece since the beginning of 2008.

The Link between Board Structure, Audit, and Performance for Corporate Sustainability

“…The implications of the CEO assuming the role of chairman of the board of directors reveal a positive relationship on the ROA, regardless of the effects of the industry or the effects generated by the particularities of the economies analyzed in our study. These results are consistent with the results obtained by Georgantopoulos and Filos [20]. In the study performed in 2017, they investigate the impact of corporate governance attributes on Greek banks during the crisis period and the authors find out, from the econometric calculations, that the chairman-chief executive officer duality influences positively for two out of four proxies the performance of the banks under study.…”

“…This hypothesis was validated by researchers such as Hu and Loh [16], Bae et al [17], Fernandez-Gago et al [18], and Hoti and Dermaku [19]. Georgantopoulos and Filos [20], through GMM models, also validates the hypothesis that increasing the number of members on the board improves performance. Zhou et al [21], based on a sample of entities listed on the ATHEX between 2008-2012, identifies that entities with larger boards are more efficient.…”

“…The audit is not limited to reassuring shareholders of the reliability and accuracy of the accounting information disclosed by managers, but it evolves towards an audit focused on the expectations of all stakeholders [47]. Georgantopoulos and Filos [20], through the GMM estimations, identifies a positive but weak relationship between the auditing of financial statements by a Big4 company and performance. This result suggests that the certification provided by a well-reputed and creditable auditor in the field may increase investor confidence and equally increase financial performance.…”

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“…The same conclusions are drawn by Bailey et al (2006), specifically, that better corporate governance provides an institutional framework that improves significantly the accuracy and transparency of disclosed information to shareholders including the ones concerning insider trading. This is also true for Greece as Georgantopoulos and Filos (2017), found examining the relationship of the board of directors as a corporate governance mechanism and performance of Greek Banks during the period of the financial crisis.…”

Assessing employment effects of mergers using accounting measures: Some evidence from Greece in the period of economic crisis

“…Last, in Greece, after the U.S crisis in mid-2007, there was an evolving economic crisis, which started at the end of 2009 and everyone noticed that this crisis due to public debt was not temporary and affects several industry sectors (Georgantopoulos and Filos, 2017;Pazarskis et al, 2017). The Greek government resorted to the "support mechanism" to cover its public debt and actually, from 2010 it has begun in Greece the era of "troika": the European Central Bank, the European Union and the International Monetary Fund are for the first time in European history parts of the "troika".…”