Who disciplines bank managers?

Schaeck, Klaus and Cihak, Martin and Maechler, Andrea and Stolz, Stephanie (2012) Who disciplines bank managers? Review of Finance, 16 (1). pp. 197-243. ISSN 1572-3097

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Abstract

We exploit a unique data set of executive turnovers in community banks to test the micro-mechanisms of discipline by examining the monitoring and influencing role of different stakeholders. We find executives are more likely to be dismissed in risky institutions. Examining the roles of shareholders, debtholders, and regulators as monitors, we obtain evidence for shareholder discipline. However, there is no evidence that risk affects dismissals more if debtholders have a larger stake in the bank or when regulators are aware of distress. Examining the roles of shareholders, debtholders, and regulators as monitors, we obtain evidence for shareholder discipline. However, there is no evidence that risk affects dismissals more if debtholders have a larger stake in the bank or when regulators are aware of distress. When we analyze risk, losses, and profitability following turnovers, we obtain no evidence that replacing executives improves performance.

Item Type:
Journal Article
Journal or Publication Title:
Review of Finance
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2003
Subjects:
ID Code:
73590
Deposited By:
Deposited On:
14 Apr 2015 11:22
Refereed?:
Yes
Published?:
Published
Last Modified:
07 Oct 2020 03:32