Can bank boards prevent misconduct?
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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.
Nguyen , D D , Hagendorff , J & Eshraghi , A 2016 , ' Can bank boards prevent misconduct? ' , Review of Finance , vol. 20 , no. 1 , pp. 1-36 . https://doi.org/10.1093/rof/rfv011
Review of Finance
© The Authors 2015. Published by Oxford University Press on behalf of the European Finance Association. All rights reserved. This work is made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at doi: 10.1093/rof/rfv011
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