The Library
Board structure and corporate risk taking in the UK financial sector
Tools
Akbar, S., Buthiena, K., Poletti, J. and Shah, Syed Zulfiqar Ali (2017) Board structure and corporate risk taking in the UK financial sector. International Review of Financial Analysis, 50 . pp. 101-110. doi:10.1016/j.irfa.2017.02.001 ISSN 1057-5219.
|
PDF
WRAP-board-structure-corporate-risk-taking-sector-Shah-2017.pdf - Accepted Version - Requires a PDF viewer. Download (609Kb) | Preview |
Official URL: https://doi.org/10.1016/j.irfa.2017.02.001
Abstract
This paper examines the relationship between board structure and corporate risk taking in the UK financial sector. We show how the board size, board independence and combining the role of CEO and chairperson in boards may affect corporate risk taking in financial firms. Our sample is based on a panel dataset of all publicly listed firms in the UK financial sector, which includes banks, insurance, real estate and financial services companies over a ten year period (2003-2012). After controlling for the effects of endogeneity through the application of the dynamic panel generalized method of moments estimator, the findings of this study suggest that the presence of non-executive directors and powerful CEOs in corporate boards reduces corporate risk taking practices in financial firms. The negative relationship can be explained within the agency theory context, where managers are regarded as more risk averse because of the reputational and employment risk. An increased power concentration is therefore expected to enhance the risk aversion behaviour of directors. The findings however, do not show any significant effect of board size on corporate risk taking in financial firms. As this study covers recommendations of the UK Corporate Governance Code on the role of corporate boards in managing firms’ risk, the empirical evidence could be useful for corporate governance regulation and policy making.
Item Type: | Journal Article | ||||||||
---|---|---|---|---|---|---|---|---|---|
Subjects: | H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management H Social Sciences > HG Finance |
||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
||||||||
Library of Congress Subject Headings (LCSH): | Financial services industry -- Great Britain, Directors of corporations, Boards of directors | ||||||||
Journal or Publication Title: | International Review of Financial Analysis | ||||||||
Publisher: | Elsevier BV | ||||||||
ISSN: | 1057-5219 | ||||||||
Official Date: | March 2017 | ||||||||
Dates: |
|
||||||||
Volume: | 50 | ||||||||
Page Range: | pp. 101-110 | ||||||||
DOI: | 10.1016/j.irfa.2017.02.001 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 13 February 2017 | ||||||||
Date of first compliant Open Access: | 11 September 2018 | ||||||||
Related URLs: |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |
Downloads
Downloads per month over past year