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.
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Notes
- 1.
For example, John Stumpf from Wells Fargo and Jamie Dimon from JPMorgan are often cited as successful bank executives. See ‘Jamie Dimon, the last King of Wall Street’, Financial Times, 17 May 2013.
- 2.
We define top executives as CEO, CFO, COO, CRO, CIO, Chairman, President, Division CEO, Division President, Division Chairman, Head of Division, Regional CEO, Regional President, and Regional Chairman.
- 3.
Ivy League institutions are eight North Eastern American higher education institutions, including Brown University, Columbia University, Cornell University, Dartmouth College, Harvard University, Princeton University, University of Pennsylvania and Yale University.
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Nguyen, D.D., Hagendorff, J., Eshraghi, A. (2016). When Do Individual Bank Executives Matter for Bank Performance?. In: Rossi, S., Malavasi, R. (eds) Financial Crisis, Bank Behaviour and Credit Crunch. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-17413-6_9
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DOI: https://doi.org/10.1007/978-3-319-17413-6_9
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