The influence of corporate governance on bank risk during a financial crisis

Felício, J. Augusto; Rodrigues, Ricardo; Grove, Hugh; Greiner, Adam J.

doi:10.1080/1331677x.2018.1436457

Cited by 36 publications

(28 citation statements)

References 41 publications

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“…The relationship found between board size and distance to default suggests that the risk of bankruptcy is positively and significantly related to the size of the board of directors. This result is in line with the work of Switzer et al (2018), Fel ıcio et al (2018, John and Ogechukwu (2018) and Baklouti et al (2016). All other boardrelated variables do not show a significant relationship to the risk of default.…”

Section: Introductionsupporting

confidence: 93%

Corporate board and default risk of financial firms

García

Herrero

Morillas

2021

Economic Research-Ekonomska Istraživanja

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This paper analyses the impact of corporate board structure on default risk of European banking firms. We focus on four core aspects of boards that have been addressed in Directive 2013/36/ EU to strengthen the corporate governance of banks: the size of boards, their independence, the participation of female directors and CEO duality. We employ panel data analysis to study the 109 European listed banks between 2002 and 2019. Default risk is estimated by Merton's (1974) distance to default. We take into account the presence of unobservable heterogeneity, simultaneity and dynamic endogeneity and estimate the model using the dynamic difference and dynamic system GMM methodologies. The results show that the size of the board influences banks' default risk. Furthermore, bank size, firm profitability and GDP also exert a considerable influence.

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Section: Introductionsupporting

confidence: 93%

Corporate board and default risk of financial firms

García

Herrero

Morillas

2021

Economic Research-Ekonomska Istraživanja

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“…due to the increased scrutiny of accounting practices. Facts such as weak investors' rights protection can provide insiders with incentives to extract private benefits by disguising the actual performance of the company (Fel ıcio et al, 2018;La Porta et al, 2000) and by obfuscating firm performance (Dick et al, 2017;Lee, Chen, & Ning, 2017;Leuz et al, 2003). The S.O.X.…”

Section: Institutional System and Real Activities Manipulationmentioning

confidence: 99%

Real earnings management and corporate governance: a study of Latin America

Mellado

Saona

2019

Economic Research-Ekonomska Istraživanja

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This article analyses the impact of ownership structure features and institutional settings on real activities manipulation. The analysis is based on a sample of listed companies in the underexplored Latin American market for the period of 2004-2016. Paneldata-based G.M.M. System Estimation is used in the empirical analysis. The results confirm that the monitoring role of the majority owner is crucial in mitigating managerial opportunistic behaviour. Here, opportunistic behaviour refers to engaging in real activities manipulation that reduces the informative content of financial statements. However, analysis of insider ownership revealed that managers had a negative impact on transparency. We observed that as insider ownership increases, managers engage more actively in real earnings management. We also find that the institutional ownership and the quality of the regulatory system proved to be effective mechanisms in reducing real activities manipulation. ARTICLE HISTORY

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“…Such a person is spared by procedural delays and unnecessary objections in making better decisions for organizational well-being. Recently, Felício et al [2018] reported a negative association between CEO duality and firm risk. Armeanu et al [2017] also supported these results as they found a negative relationship between CEO duality and failure risk, but their results were insignificant.…”

Section: Literature Review and Hypothesis Development 21 Board Vigilmentioning

confidence: 99%

Corporate board vigilance and insolvency risk: a mediated moderation model of debt maturity and fixed collaterals

Hussain

Wen

Saad

2021

International Journal of Management and Economics

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Studies indicate that a consistent rise in insolvency risk should be addressed at the strategic level. Vigilant boards can use leverage maturity structure as a tool to control insolvency risk. However, according to the information asymmetry theory, leverage acquisition is subject to the presence of fixed assets which can be used as collateral. The current study focuses on the relationship between board vigilance and insolvency risk, mediated by debt maturity and moderated by fixed collaterals in Pakistan based non-financial firms. A data set of 284 firms is constructed between the years 2013 and 2017. Hierarchical multiple regression analysis is used to test the proposed hypothesis using ordinary least squares (OLS) and panel corrected standard errors (PCSE) regression estimators. The results indicate that debt maturity mediates the relationship between board vigilance and insolvency risk. New information is generated about the fixed collaterals, and these negatively moderate the relationship between leverage maturity and emerging market z-score indicating inefficiency in the usage of fixed assets as collaterals. These results are robust to both regression techniques confirming that the non-productive fixed collaterals overshadow the positives of tangible assets in asset structure.

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The influence of corporate governance on bank risk during a financial crisis

Cited by 36 publications

References 41 publications

Corporate board and default risk of financial firms

Corporate board and default risk of financial firms

Real earnings management and corporate governance: a study of Latin America

Corporate board vigilance and insolvency risk: a mediated moderation model of debt maturity and fixed collaterals

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