Abstract
Research Question/Issue: Do enforcement actions impact banks' board composition?
Based on a unique sample of sanctions imposed on Italian banks by the country's
banking supervisory authority from 2009 to 2015, we investigate whether
supervisory enforcement actions affect changes at the board level. Moreover, we
examine whether changes at the board level after a sanction are effective in reducing
the probability of further sanctions in the future.
Research Findings/Insights: The findings reveal that sanctioned banks change their
board composition following a supervisory sanction. We further test whether these
changes improve bank governance and find that, under certain conditions, they may
reduce the probability that the board is sanctioned again. Robustness tests confirm
the results.
Theoretical/Academic Implications: This study provides empirical evidence that supports
the role of supervisory enforcement actions in inducing banks to adopt changes
at the board level. Given that the relationship between supervisory sanctions and
changes in board characteristics is still neglected, we contend that our results may
increase the understanding of the effectiveness of enforcement actions in improving
board characteristics.
Practitioner/Policy Implications: We believe that our results have policy implications
by making a clear and concrete contribution to the ongoing debate on the
revision of the principles for enhancing corporate governance and banking
supervision.
Lingua originale | English |
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pagine (da-a) | 22-44 |
Numero di pagine | 23 |
Rivista | Corporate Governance |
DOI | |
Stato di pubblicazione | Pubblicato - 2021 |
Keywords
- Corporate Governance, Enforcement Actions, Board of Directors, Supervisory Authority, Banking Industry