IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01861817.html
   My bibliography  Save this paper

Government Involvement in the Corporate Governance of Banks

Author

Listed:
  • Linus Siming

    (Audencia Business School)

Abstract

On March 18, 1976, the Swedish parliament voted on a bill that, if approved, would have substantially increased both the scale and scope of government representation on bank boards. Since parliament was hung, the outcome of the vote was decided by a lottery. I exploit this lottery to study the causal effect on shareholder value of government involvement in the corporate governance of banks. I find that the rejection of the bill resulted in positive abnormal returns that persisted in the following days. The results suggest that unsolicited government involvement in the corporate governance of banks is harmful for owners.

Suggested Citation

  • Linus Siming, 2018. "Government Involvement in the Corporate Governance of Banks," Post-Print hal-01861817, HAL.
    • Handle: RePEc:hal:journl:hal-01861817
    DOI: 10.1162/REST_a_00702
    Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-01861817
    as

    Download full text from publisher

    File URL: https://audencia.hal.science/hal-01861817/document
    Download Restriction: no
    File URL: https://libkey.io/10.1162/REST_a_00702?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ben S. Bernanke & Kenneth N. Kuttner, 2005. "What Explains the Stock Market's Reaction to Federal Reserve Policy?," Journal of Finance, American Finance Association, vol. 60(3), pages 1221-1257, June.
    2. Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 58-107, March.
    3. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    4. Harald Hau & Marcel Thum, 2009. "Subprime crisis and board (in-) competence: private versus public banks in Germany [‘Corporate governance and board of directors: Performance effects of changes in board composition’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 24(60), pages 701-752.
    5. Becht, Marco & Bolton, Patrick & Roell, Ailsa, 2003. "Corporate governance and control," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 1, pages 1-109, Elsevier.
    6. Luigi Zingales, 2000. "In Search of New Foundations," Journal of Finance, American Finance Association, vol. 55(4), pages 1623-1653, August.
    7. Swary, Itzhak, 1986. "Stock Market Reaction to Regulatory Action in the Continental Illinois Crisis," The Journal of Business, University of Chicago Press, vol. 59(3), pages 451-473, July.
    8. Wintoki, M. Babajide & Linck, James S. & Netter, Jeffry M., 2012. "Endogeneity and the dynamics of internal corporate governance," Journal of Financial Economics, Elsevier, vol. 105(3), pages 581-606.
    9. Choi, Jongmoo Jay & Elyasiani, Elyas & Kopecky, Kenneth J., 1992. "The sensitivity of bank stock returns to market, interest and exchange rate risks," Journal of Banking & Finance, Elsevier, vol. 16(5), pages 983-1004, September.
    10. Harald Hau & Marcel Thum, 2009. "Subprime Crisis and Board (In-)Competence: Private vs. Public Banks in Germany," CESifo Working Paper Series 2640, CESifo.
    11. Jakob Haan & Razvan Vlahu, 2016. "Corporate Governance Of Banks: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 30(2), pages 228-277, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Catarina Fernandes & Jorge Farinha & Francisco Vitorino Martins & Cesario Mateus, 2018. "Bank governance and performance: a survey of the literature," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(3), pages 236-256, July.
    2. Catarina Fernandes & Jorge Farinha & Francisco Vitorino Martins & Cesario Mateus, 2017. "Supervisory boards, financial crisis and bank performance: do board characteristics matter?," Journal of Banking Regulation, Palgrave Macmillan, vol. 18(4), pages 310-337, November.
    3. ATM Adnan & Nisar Ahmed, 2019. "The Transformation Of The Corporate Governance Model: A Literature Review," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 8(3), pages 7-47.
    4. Zhou, Yifan & Kara, Alper & Molyneux, Philip, 2019. "Chair-CEO generation gap and bank risk-taking," The British Accounting Review, Elsevier, vol. 51(4), pages 352-372.
    5. Dorothee Feils & Manzur Rahman & Florin Şabac, 2018. "Corporate Governance Systems Diversity: A Coasian Perspective on Stakeholder Rights," Journal of Business Ethics, Springer, vol. 150(2), pages 451-466, June.
    6. Rubén Chavarín, 2020. "Risk governance, banks affiliated to business groups, and foreign ownership," Risk Management, Palgrave Macmillan, vol. 22(1), pages 1-37, March.
    7. Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2014. "Executive board composition and bank risk taking," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 48-65.
    8. Patricia Crifo & Elena Escrig-Olmedo & Nicolas Mottis, 2019. "Corporate Governance as a Key Driver of Corporate Sustainability in France: The Role of Board Members and Investor Relations," Journal of Business Ethics, Springer, vol. 159(4), pages 1127-1146, November.
    9. Koetter, Michael & Müller, Carola & Noth, Felix & Fritz, Benedikt, 2018. "May the force be with you: Exit barriers, governance shocks, and profitability sclerosis in banking," Discussion Papers 49/2018, Deutsche Bundesbank.
    10. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, January.
    11. Mollah, Sabur & Liljeblom, Eva & Mobarek, Asma, 2021. "Heterogeneity in independent non-executive directors' attributes and risk-taking in large banks," Journal of Corporate Finance, Elsevier, vol. 70(C).
    12. Thierno Barry & Laetitia Lepetit & Frank Strobel & Thu Tran, 2020. "Examining the impact on risk when directors are related to minority shareholders in closely-held banks," Working Papers hal-02512450, HAL.
    13. Ibáñez-Hernández, Francisco J. & Peña-Cerezo, Miguel A. & Araujo-de-la-Mata, Andrés, 2019. "Corporate governance and procyclicality in a banking crisis: Empirical evidence and implications," Finance Research Letters, Elsevier, vol. 30(C), pages 271-275.
    14. Emma L. Schultz & David T. Tan & Kathleen D. Walsh, 2010. "Endogeneity and the corporate governance - performance relation," Australian Journal of Management, Australian School of Business, vol. 35(2), pages 145-163, August.
    15. Shkendije Himaj, 2014. "Corporate Governance in Banks and its Impact on Risk and Performance: Review of Literature on the Selected Governance Mechanisms," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 3(3), pages 53-85.
    16. Renata Karkowska & Jan Acedański, 2020. "The effect of corporate board attributes on bank stability," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 19(2), pages 99-137, May.
    17. Kick, Thomas & Nehring, Inge & Schertler, Andrea, 2017. "Do all new brooms sweep clean? Evidence for outside bank appointments," Journal of Banking & Finance, Elsevier, vol. 84(C), pages 135-151.
    18. Thierno Amadou Barry & Laetitia Lepetit & Frank Strobel & Thu Ha Tran, 2022. "Implications for Bank Risk when Directors are Related to Minority Shareholders," Journal of Financial Services Research, Springer;Western Finance Association, vol. 62(3), pages 233-265, December.
    19. Robert S. Chirinko, 2022. "Is a State Bank a Useful Economic Development Tool in the United States?," CESifo Working Paper Series 10098, CESifo.
    20. Gilani, Usman & Keasey, Kevin & Vallascas, Francesco, 2021. "Board financial expertise and the capital decisions of US banks," Journal of Corporate Finance, Elsevier, vol. 71(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01861817. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.