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Regulatory Pressure and Bank Directors’ Incentives to Attend Board Meetings

Regulatory Pressure and Bank Directors’ Incentives to Attend Board Meetings The primary way in which directors obtain necessary information is by attending board meetings. Bank directors, in particular, are strongly urged to attend meetings by regulators. We investigate whether such pressure is sufficient for bank directors to have good attendance records. Using data on whether directors were named in proxy statements as attending fewer meetings than they were supposed to, we find that (1) bank directors appear to have worse attendance records than their counterparts in nonfinancial firms, (2) their attendance behavior is related to explicit and implicit incentives for attendance, and (3) past attendance records are not related to the likelihood a director departs the board. Our results suggest that explicit and implicit incentives may provide important complements to regulatory pressure in influencing director behavior. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Review of Finance Wiley

Regulatory Pressure and Bank Directors’ Incentives to Attend Board Meetings

Adams, Renée Birgit
International Review of Finance , Volume 12 (2) – Jun 1, 2012
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22 pages

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References (40)

Publisher
Wiley
Copyright
International Review of Finance © International Review of Finance Ltd. 2012
ISSN
1369-412X
eISSN
1468-2443
DOI
10.1111/j.1468-2443.2012.01149.x
Publisher site
See Article on Publisher Site

Abstract

The primary way in which directors obtain necessary information is by attending board meetings. Bank directors, in particular, are strongly urged to attend meetings by regulators. We investigate whether such pressure is sufficient for bank directors to have good attendance records. Using data on whether directors were named in proxy statements as attending fewer meetings than they were supposed to, we find that (1) bank directors appear to have worse attendance records than their counterparts in nonfinancial firms, (2) their attendance behavior is related to explicit and implicit incentives for attendance, and (3) past attendance records are not related to the likelihood a director departs the board. Our results suggest that explicit and implicit incentives may provide important complements to regulatory pressure in influencing director behavior.

Journal

International Review of Finance – Wiley

Published: Jun 1, 2012

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