The Wolves of Wall Street? Managerial Attributes and Bank Risk

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

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
• Electronic ISSN: 1096-0473
• 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