The effect of CEO power on bank risk: do boards and institutional investors matter?

Yener Altunbaş; John Thornton; Yurtsev Uymaz

doi:10.1016/j.frl.2019.05.020

The effect of CEO power on bank risk: do boards and institutional investors matter?

Yener Altunbaş, John Thornton, Yurtsev Uymaz

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Abstract

We test for a link between CEO power and risk-taking in US banks. Banks are more likely to take risks if they have powerful CEOs and relatively poor balance sheets. There is little evidence that executive board size and independence have a dampening effect on the channels through which powerful CEOs influence risk-taking and some evidence that institutional investors reinforce the risk-taking preferences of powerful CEOs.

Original language	English
Article number	101202
Journal	Finance Research Letters
Volume	33
Early online date	4 Jun 2019
DOIs	https://doi.org/10.1016/j.frl.2019.05.020
Publication status	Published - Mar 2020

Keywords

Banks
Boards of directors
CEO power
Governance
Institutional investors
Risk

Access to Document

10.1016/j.frl.2019.05.020

Accepted_ManuscriptAccepted author manuscript, 461 KBLicence: CC BY-NC-ND

Cite this

@article{efc48617e5274710a62947a375aeb99a,

title = "The effect of CEO power on bank risk: do boards and institutional investors matter?",

abstract = "We test for a link between CEO power and risk-taking in US banks. Banks are more likely to take risks if they have powerful CEOs and relatively poor balance sheets. There is little evidence that executive board size and independence have a dampening effect on the channels through which powerful CEOs influence risk-taking and some evidence that institutional investors reinforce the risk-taking preferences of powerful CEOs.",

keywords = "Banks, Boards of directors, CEO power, Governance, Institutional investors, Risk",

author = "Yener Altunba{\c s} and John Thornton and Yurtsev Uymaz",

year = "2020",

month = mar,

doi = "10.1016/j.frl.2019.05.020",

language = "English",

volume = "33",

journal = "Finance Research Letters",