Can Bank Boards Prevent Misconduct? * | Zendy

Duc Duy Nguyen | Zendy; Jens Hagendorff | Zendy; Arman Eshraghi | Zendy

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Can Bank Boards Prevent Misconduct? *

Author(s) -

Duc Duy Nguyen,

Jens Hagendorff,

Arman Eshraghi

Publication year - 2015

Publication title -

european finance review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.933

H-Index - 61

eISSN - 1573-692X

pISSN - 1382-6662

DOI - 10.1093/rof/rfv011

Subject(s) - misconduct , enforcement , business , shareholder , accounting , political science , corporate governance , finance , law

We study regulatory enforcement actions issued against US banks to show that both board monitoring and advising are effective in preventing misconduct by banks. While better monitoring by boards prevents all categories of misconduct, better advising prevents misconduct of a technical nature. Board monitoring increases the likelihood that misconduct is detected, increases the penalties imposed on the CEO, and alleviates shareholder wealth losses following the detection of misconduct by regulators. Our article offers novel insights on how to structure bank boards to prevent bank misconduct.PostprintPeer reviewe

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