TY - JOUR
T1 - Heterogeneity in independent non-executive directors' attributes and risk-taking in large banks
AU - Mollah, Sabur
AU - Liljeblom, Eva
AU - Mobarek, Asma
PY - 2021/8/21
Y1 - 2021/8/21
N2 - The extant literature suggests that complex firms can benefit from independent non-executive director (INED) quality. To address the issue of INED quality, we look at heterogeneity in the independent non-executive directors' (INEDs') attributes and explore whether this is related to risk-taking behaviour in large banks. We gather novel, hand-collected, director-level data for approximately 2400 independent non-executive directors (INEDs) of 185 global large banks from 35 countries for the period of 2004–2016, concluding that heterogeneity in INEDs' gender, financial expertise, and board tenure all influence risk-taking behaviour. Employing several identification strategies, we show that the cause seems to be heterogeneity in the INEDs' attributes, as channelled through information asymmetry. We also find that heterogeneity in the INEDs' attributes significantly mitigates bank risk-taking in the post-2009 period. Our study contributes to the literature on both the benefits of INEDs and director heterogeneity.
AB - The extant literature suggests that complex firms can benefit from independent non-executive director (INED) quality. To address the issue of INED quality, we look at heterogeneity in the independent non-executive directors' (INEDs') attributes and explore whether this is related to risk-taking behaviour in large banks. We gather novel, hand-collected, director-level data for approximately 2400 independent non-executive directors (INEDs) of 185 global large banks from 35 countries for the period of 2004–2016, concluding that heterogeneity in INEDs' gender, financial expertise, and board tenure all influence risk-taking behaviour. Employing several identification strategies, we show that the cause seems to be heterogeneity in the INEDs' attributes, as channelled through information asymmetry. We also find that heterogeneity in the INEDs' attributes significantly mitigates bank risk-taking in the post-2009 period. Our study contributes to the literature on both the benefits of INEDs and director heterogeneity.
KW - 512 Business and Management
KW - dependent non-executive director (INED)
KW - Attributes heterogeneity
KW - Risk-taking
KW - Large banks
UR - https://www.mendeley.com/catalogue/aa63e348-7978-36cd-91df-39d0b1c0763c/
UR - http://www.scopus.com/inward/record.url?scp=85113699918&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2021.102074
DO - 10.1016/j.jcorpfin.2021.102074
M3 - Article
SN - 0929-1199
VL - 70
SP - 102074
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
M1 - 102074
ER -