Executive board composition and bank risk taking

Allen N. Berger, Thomas Kick, Klaus Schaeck*

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)

142 Citations (Scopus)

Abstract

Little is known about how the demographic characteristics of executive teams affect corporate governance in banking. Exploiting a unique dataset, we investigate how age, gender, and educational composition of executive teams affect the portfolio risk of financial institutions. Using difference-in-difference estimations that focus exclusively on mandatory executive retirements for the entire population of German bank executive officers, we demonstrate that younger executive teams increase portfolio risk, as do board changes that result in a higher proportion of female executives, although this latter effect is weaker in terms of both statistical and economic significance. In contrast, when board changes increase the representation of executives holding Ph.D. degrees, portfolio risk declines.

Original languageEnglish
Pages (from-to)48-65
Number of pages18
JournalJournal of Corporate Finance
Volume28
DOIs
Publication statusPublished - 1 Oct 2014

Keywords

  • Age
  • Banks
  • Education
  • Executives
  • Gender
  • Portfolio risk

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