Corporate Governance : Bank Board Characteristic Variables

There are three internal and one external governance mechanisms used for owners to govern managers to ensure they comply with their responsibility to satisfy stakeholders and shareholder’s needs. First, ownership concentration is stated as the number of large-block shareholders and the total percentage of the shares they own (Hitt, Ireland, Hoskisson, 2017, p. 317). Second, the board of directors which are elected by the shareholders. Their primary duty is to act in the owner’s best interest and to monitor and control the businesses top-level managers (Hitt, Ireland, Hoskisson, 2017, p. 319). Third, is the

As Canadian Coalition for Good Corporate Governance indicates that the good governance of a corporation is essential to creating long-term sustainable value and reducing investment risk. In other words, the high quality performance of board directors plays a key role in the success of a corporation. We evaluate it based

People often question whether corporate boards matter because their day-today impact is difficult to observe. But, when things go wrong, they can become the center of attention. Certainly this was true of the Enron, Worldcom, and Parmalat scandals. The directors of Enron and Worldcom, in particular, were held liable for the fraud that occurred: Enron directors had to pay $168 million to investor plaintiffs, of which $13 million was out of pocket (not covered by insurance); and Worldcom directors had to pay $36 million, of which $18 million was out of pocket. As a consequence of these scandals and ongoing concerns about corporate governance, boards have been at the center of the policy

1. Does the board comprise a majority of independent directors? Ensuring that a majority of independent directors to monitor the actions of executive directors helps to address the potential for, or perception of, conflict of interest of executive director involvement in board decisions. A good corporate governance structure would encourage the board to regularly assess whether each non-executive director is independent.

Prior to the advent of the Sarbanes-Oxley Act of 2002, referred to herein as “SOX,” the board of directors’ pivotal role was to advise senior leaders on the organization’s strategy, business model, and succession planning (Larcker, 2011, p. 3). Additionally, the board had the responsibility for risk management identification and risk mitigation oversight, determining executive benefits, and approval of significant acquisitions (Larcker, 2011, p. 3). Furthermore, for many public organizations, audit committees existed before SOX and provided oversight of internal processes and controls. Melissa Maleske (2012) advised that the roles and responsibilities of the board were viewed “…from a perspective that the board serves management” (p. 2). In contrast, Maleske (2012) noted that SOX regulations altered the landscape “…to a perspective that management is working for the board” (p. 2). SOX expanded not only the duties of the board and the audit committee, but also the authority of these bodies (Maleske, 2012, p. 2).

To the extent of prevention of corporate failure, I argue that three ASX principles and recommendations could halt the demise of Dick Smith. Firstly, the 2nd principle which is “Structure the board to add value” by structuring the board with a majority of independent directors would prevent CEO dominance because some suggest that independent outside directors can reduce the influence of dominant individuals (ASX, 2014, p. 17). In accordance with Gallagher and Bennie (2015, p. 20), the independent directors are likely to focus on the company’s objectives and not to make decision relying on others. Furthermore, an addressing of independent directors would reduce the reliance on management, and create the effectiveness on monitoring (Dechow et al. 1996 cited in Christensen, Kent, and Stewart (2010)), as well as capability to lessen the conflict of interest between managers and shareholders (Hardjo & Alireza, 2012, p. 4). Thus, DSE’s board would be more active to monitor the CEO’s performances because independent directors pay attentions to the interest of company (Gallagher & Bennie, 2015, p. 20) and shareholders (Hardjo & Alireza, 2012, p. 4)

Corporate governance lies at the heart of the way businesses are run. Of ten defined as the ‘way businesses are directed and controlled’, it concerns the work of the board as the body which bears ultimate responsibility for the business. Governance relates to how the board is constituted and how it performs its role. It encompasses issues of board

• Governance and oversight: Assessing business model and strategy changes and reinforcing the importance of sound corporate governance appropriate for the size and complexity of the individual bank. A specific focus will be on determining the adequacy of strategic, capital, and succession planning. Examiners will assess whether the plan is appropriate in light of the risks in new products or services. If applicable, examiners will assess the bank’s merger and acquisition processes and procedures.

The article I chose this week relates to this week’s topic of organizational structure as it discusses the authority of the decision making process and where the ultimate decision of setting layers of accountability within the board structure of Bank of America. On September 18, 2015 Gretchen Morgenson reported that Bank of America is holding a special meeting on Tuesday, September 22 to gather shareholders to the company headquarters to vote on a restructuring of the organizational structure that would overturn a bylaw requiring that the board be overseen by an independent “chairman” which had been voted and approved at the 2009 annual meeting. Last fall the bylaw was overturned when the board elected its chief executive officer to also serve

Assuming that BBB Bank is one of the FTSE 350 and based in the UK, we will be looking at two main publications that can be used as guidance for creating an effective and balanced board of directors. The first is the Higgs Report (2003), which focuses on the role and effectiveness of non-executive directors and builds on earlier reports. The second is the UK Corporate Governance Code (2010), which is administered by the Financial Reporting Council and is now the main reference in regards to corporate governance in the UK. I will not go into detail about all the recommendations made in the Higgs report or the UK Corporate Governance Code, but will focus instead on a few key points that Andrews would need to consider when looking at a restructure of the board at BBB Bank.

The rise and fall of the Royal Bank of Scotland is characterized by poor corporate governance which allowed for the complete dominance of the executive management over the board of directors and a massive principal-agent problem. Positive social dynamics and the power of weak ties allowed for compliance while intimidation and bullying tactics silenced questions, concerns and opposition. The board’s utter compliancy and borderline negligence enabled rampant, unchecked empire-building at the cost of shareholder value and led to a spiral of unaccountability and gross incompetence. Stakeholders’ loss of confidence from misinformation and misdirection was an inevitability that sealed

The Nigerian Code of Corporate governance states that the Board should be of a sufficient size relative to the scale and complexity of the company’s operations and be composed in such a way as to ensure diversity of experience without compromising independence, compatibility, integrity and availability of members to attend meetings.

Because of the clear, governance and management efficiency, the legal person shareholders of commercial banks tend to play a greater influence on the governance structure of the commercial banks than in the state shareholders and the dispersed public shareholders. The proportion of legal person shares is relatively concentrated, they have the ability to supervise the management of commercial banks in the management of the behavior, so that it is more in line with the interests of shareholders. The proportion of legal person shares is large, because the legal person shares cannot flow, can only transfer agreement, with strong stability, and therefore they are more concerned about the long-term development of commercial banks, they have stronger motivation to supervise and control the commercial bank management. Therefore, to increase the proportion of corporate shares, improve the modern enterprise system of commercial banks, play its role in the supervision of bank governance, so that the corporate shareholders in the management of commercial banks play a more important role is to improve the performance of commercial banks is an inevitable choice.

This paper examines the impact of multi-layer governance (MLG) mechanisms, consisting of board and ownership structures, Sharia supervisory board (SSB) and country-level governance characteristics on the level of risk disclosure by banks. Using one of the most extensive datasets on MLG and risk disclosure to-date from 14 countries in the Middle East and North Africa (MENA) region over the period of 2006 to 2013, we find a positive and statistically significant link between our MLG measures and risk disclosure. Specifically, we find that governmental ownership, family ownership, SSB, board size, non-executive directors and control of corruption, are positively related to bank level of risk disclosure whilst CEO duality, political stability and absence of violence are associated negatively with risk disclosure, but statistically insignificant. Our empirical findings are largely in line with the predictions of our multi-theoretical framework that incorporates insights from agency, signalling, legitimacy, and resources dependence theories. Our findings are robust to alternative firm- and country-level controls, alternative MLG mechanisms and risk disclosure proxies, alternative estimation techniques, and endogeneity problems.

Corporate governance is a key element in improving the economic efficiency of a bank. It should be fair and transparent to its customers and stakeholders in all its transactions. A sound corporate governance also contributes to the protection of depositors of the bank. It also involves the manner in which the business and affairs of banks are governed by their board of directors and senior management, which reflects how they function. This paper is descriptive in nature conferred about the composition of the board of directors in the Public sector commercial banks. The finding of this paper exemplify that the Public sector commercial banks have ‘Fit and Proper’ board in their respective banks.