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The effect of board size and composition on European bank performance

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Abstract

Banks are “special” financial institutions generating distinct corporate governance challenges. The present paper examines the relationship between two of the most pertinent corporate governance factors—that is, the size of the Board of Directors and the proportion of non-executive directors—and firm performance on a sample of 58 large European banks over the period 2002–2004. The empirical analysis embraces a number of bank-specific variables. Our results reveal that bank profitability is negatively related to the size of the Board of Directors, while the impact of Board composition, although positive in all models, is, in most cases, insignificant. The results are robust after controlling for firm-specific variables.

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  1. Department of Banking and Financial Management, University of Piraeus, 80 Karaoli & Dimitriou Street, 18534, Piraeus, Greece

    Panagiotis K. Staikouras

  2. Department of Accounting and Finance, Athens University of Economics and Business, Athens, Greece

    Christos K. Staikouras & Maria-Eleni K. Agoraki

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  1. Panagiotis K. Staikouras
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Staikouras, P.K., Staikouras, C.K. & Agoraki, ME.K. The effect of board size and composition on European bank performance. Eur J Law Econ 23, 1–27 (2007). https://doi.org/10.1007/s10657-007-9001-2

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