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When Do Individual Bank Executives Matter for Bank Performance?

In: Financial Crisis, Bank Behaviour and Credit Crunch

Author

Listed:
  • Duc Duy Nguyen

    (University of Edinburgh – Business School)

  • Jens Hagendorff

    (University of Edinburgh – Business School)

  • Arman Eshraghi

    (University of Edinburgh – Business School)

Abstract

This chapter seeks to understand how the characteristics of executive directors affect the market performance of US banks. To explore the expected performance effects linked to executive characteristics, we measure changes in the market valuation of banks linked to announcements of executive appointments. We show that age, education and the prior work experience of executives create shareholder wealth while gender is not linked to measureable value effects. Our results are robust to the treatment of selection bias. By illustrating the wealth effects linked to executive appointments, our study contributes to the current debate on whether and how individual executives matter for firm performance and behaviour. The findings also shed light on the value of human capital in the banking industry. This chapter offers important insights to policymakers charged with ensuring the competency of executives in banking. Our findings advocate policies that mandate banks to appoint highly qualified executives with relevant banking experience.

Suggested Citation

  • Duc Duy Nguyen & Jens Hagendorff & Arman Eshraghi, 2016. "When Do Individual Bank Executives Matter for Bank Performance?," Contributions to Economics, in: Stefania P.S. Rossi & Roberto Malavasi (ed.), Financial Crisis, Bank Behaviour and Credit Crunch, edition 1, pages 125-138, Springer.
    • Handle: RePEc:spr:conchp:978-3-319-17413-6_9
    DOI: 10.1007/978-3-319-17413-6_9
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