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The Wolves of Wall Street? Managerial Attributes and Bank Risk

Hagendorff, J.; Saunders, A.; Steffen, S.; Vallascas, F.

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Authors

J. Hagendorff

A. Saunders

S. Steffen



Abstract

We find that chief executive officers and chief financial officers exert significant individual effects on bank risk. Manager transitions, including transitions generated by plausibly exogenous manager departures, lead to abnormally large changes in bank risk. We demonstrate that the effects of managers on bank risk are sizable and manager-specific. The effects are also partly anticipated by the board because they are reflected in managers’ pay. However, wide-ranging personal attributes, including biographical, experience, and compensation data, only explain a small share of managers’ impact on bank risk. This implies that attempts to rein in bank risk-taking by targeting manager characteristics will be challenging for investors and regulators.

Citation

Hagendorff, J., Saunders, A., Steffen, S., & Vallascas, F. (2021). The Wolves of Wall Street? Managerial Attributes and Bank Risk. Journal of Financial Intermediation, 47, https://doi.org/10.1016/j.jfi.2021.100921

Journal Article Type Article
Acceptance Date Jun 8, 2021
Online Publication Date Jun 11, 2021
Publication Date 2021-07
Deposit Date Jun 9, 2021
Publicly Available Date Dec 11, 2022
Journal Journal of Financial Intermediation
Print ISSN 1042-9573
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 47
DOI https://doi.org/10.1016/j.jfi.2021.100921
Public URL https://durham-repository.worktribe.com/output/1247150

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