Does Independent Industry Expertise Improve Board Effectiveness? Evidence From Bank Ceo Turnovers

Authors

Zhongdong Chen, University of Northern IowaFollow

Document Type

Article

Journal/Book/Conference Title

International Review of Finance

Volume

20

Issue

3

First Page

665

Last Page

699

Abstract

This study explores the impact of independent bank directors’ financial industry expertise on board effectiveness by investigating bank CEO turnovers and post-turnover bank performance. Empirical results find such expertise increases the probability of forced CEO turnover and the probability of outsider succession. It improves bank performance and reduces bank risk-taking following a forced CEO turnover. This is likely because industry-specific expertise enhances boards’ ability to locate a superior successor CEO and to monitor and advise the new management. Market reaction to bank CEO turnover announcements tends to agree with this view.

Original Publication Date

9-1-2020

DOI of published version

10.1111/irfi.12236

Repository

UNI ScholarWorks, Rod Library, University of Northern Iowa

Language

en

Recommended Citation

Chen, Zhongdong, "Does Independent Industry Expertise Improve Board Effectiveness? Evidence From Bank Ceo Turnovers" (2020). Faculty Publications. 275.
https://scholarworks.uni.edu/facpub/275