Chair-CEO generation gap and bank risk-taking

Yifan Zhou, Alper Kara, Philip Molyneux

Research output: Contribution to journalArticle

Abstract

Poor bank governance has disastrous consequences for economies as the 2007–2009 financial crisis has shown. In the aftermath, board diversity is identified as an effective mechanism to enhance bank governance. Diversity, creating cognitive conflict between board members, is expected to enhance board's independence of thought to better perform monitoring and advising functions. Age is a key demographic measure and age dissimilarity between the chair and the CEO in non-financial firms leads to better economic outcomes (Goergen, Limbach, & Scholz, 2015). In this paper, we examine whether chair-CEO age dissimilarity can mitigate banks' excessive risk-taking behaviour. Using a unique sample of 100 listed banks in Europe between 2005 and 2014, we find that age difference between the chair and the CEO reduces bank risk-taking. A chair-CEO generational gap –defined as a minimum of 20 years' age difference– has a larger impact in reducing risk-taking.

LanguageEnglish
Pages352-372
Number of pages21
JournalBritish Accounting Review
Volume51
Issue number4
Early online date22 Mar 2019
DOIs
Publication statusPublished - Jun 2019

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Bank risk taking
Chief executive officer
Age differences
Governance
Dissimilarity
Economics
Financial crisis
Risk taking
Monitoring
Risk-taking behavior
Board independence
Demographics

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Zhou, Yifan ; Kara, Alper ; Molyneux, Philip. / Chair-CEO generation gap and bank risk-taking. In: British Accounting Review. 2019 ; Vol. 51, No. 4. pp. 352-372.
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Chair-CEO generation gap and bank risk-taking. / Zhou, Yifan; Kara, Alper; Molyneux, Philip.

In: British Accounting Review, Vol. 51, No. 4, 06.2019, p. 352-372.

Research output: Contribution to journalArticle

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