Heterogeneity in independent non-executive directors' attributes and risk-taking in large banks

Mollah, Sabur, Liljeblom, Eva and Mobarek, Asma ORCID: https://orcid.org/0000-0001-6662-4770 2021. Heterogeneity in independent non-executive directors' attributes and risk-taking in large banks. Journal of Corporate Finance 70 , 102074. 10.1016/j.jcorpfin.2021.102074

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Abstract

The extant literature suggests that complex firms can benefit from independent non-executive director (INED) quality. To address the issue of INED quality, we look at heterogeneity in the independent non-executive directors' (INEDs') attributes and explore whether this is related to risk-taking behaviour in large banks. We gather novel, hand-collected, director-level data for approximately 2400 independent non-executive directors (INEDs) of 185 global large banks from 35 countries for the period of 2004–2016, concluding that heterogeneity in INEDs' gender, financial expertise, and board tenure all influence risk-taking behaviour. Employing several identification strategies, we show that the cause seems to be heterogeneity in the INEDs' attributes, as channelled through information asymmetry. We also find that heterogeneity in the INEDs' attributes significantly mitigates bank risk-taking in the post-2009 period. Our study contributes to the literature on both the benefits of INEDs and director heterogeneity.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Elsevier
ISSN:	0929-1199
Date of First Compliant Deposit:	6 February 2023
Date of Acceptance:	10 October 2021
Last Modified:	07 Feb 2023 14:35
URI:	https://orca.cardiff.ac.uk/id/eprint/156521

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