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Financial Experts On The Board: Does It Matter For The Profitability And Risk Of The U.K. Banking Industry?

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  • Nicholas Apergis

Abstract

In this article, I explore the relation among board‐level financial expertise, profitability, and risk with panel data from the U.K. banking industry. The empirical findings document that collectively, financial experts have a positive influence on the performance of banks; contribute to higher risks, especially for large banks; and improve the stock performance of banks. Moreover, the results highlight that board‐level qualified accountants have no statistical effect on profitability, whereas financial and banking professors, as well as financial experts from other industries, have a positive effect. Such findings imply that these two groups of professional financial experts may more easily adopt group‐level profit enhancements. Robustness checks confirm the results for all types of banking institutions, except those with strong real estate portfolios. Finally, certain commercial and/or policy implications of the results are reported.

Suggested Citation

  • Nicholas Apergis, 2019. "Financial Experts On The Board: Does It Matter For The Profitability And Risk Of The U.K. Banking Industry?," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 42(2), pages 243-270, July.
    • Handle: RePEc:bla:jfnres:v:42:y:2019:i:2:p:243-270
    DOI: 10.1111/jfir.12168
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    Cited by:

    1. Hsu, Ching-Yu & Chen, Sheng-Syan & Huang, Chia-Wei, 2021. "Board independence and PIPE offerings," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 478-500.
    2. Douglas A. Adu & Basil Al‐Najjar & Thitima Sitthipongpanich, 2022. "Executive compensation, environmental performance, and sustainable banking: The moderating effect of governance mechanisms," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1439-1463, May.
    3. Douglas A. Adu, 2022. "Sustainable banking initiatives, environmental disclosure and financial performance: The moderating impact of corporate governance mechanisms," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2365-2399, July.
    4. Jorge E. Galán & Yong Tan, 2024. "Green light for green credit? Evidence from its impact on bank efficiency," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 531-550, January.
    5. Zhe Li & Oksana Pryshchepa & Bo Wang, 2023. "Financial experts on the top management team: Do they reduce investment inefficiency?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(1-2), pages 198-235, January.
    6. Douglas A. Adu, 2024. "How do board and ownership characteristics affect bank risk-taking? New evidence from sub-Saharan Africa," Journal of Banking Regulation, Palgrave Macmillan, vol. 25(3), pages 209-233, September.

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