The Wolves of Wall Street? Managerial Attributes and Bank Risk

43 Pages Posted: 8 Oct 2015 Last revised: 8 Jun 2021

See all articles by Jens Hagendorff

Jens Hagendorff

King’s College London - King's Business School

Anthony Saunders

New York University - Leonard N. Stern School of Business

Sascha Steffen

Frankfurt School of Finance & Management; Centre for Economic Policy Research (CEPR)

Francesco Vallascas

Durham University

Date Written: January 29, 2021

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.

Keywords: Banks, managerial style, corporate governance, risk

JEL Classification: G21, G32, G34

Suggested Citation

Hagendorff, Jens and Saunders, Anthony and Steffen, Sascha and Vallascas, Francesco, The Wolves of Wall Street? Managerial Attributes and Bank Risk (January 29, 2021). Available at SSRN: https://ssrn.com/abstract=2670525 or http://dx.doi.org/10.2139/ssrn.2670525

Jens Hagendorff (Contact Author)

King’s College London - King's Business School

30 Aldwych
London, WC2B 4BG
United Kingdom

Anthony Saunders

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

Sascha Steffen

Frankfurt School of Finance & Management ( email )

Adickesallee
32-34
Frankfurt, 60322
Germany
16097326929 (Phone)

HOME PAGE: http://www.sascha-steffen.de

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Francesco Vallascas

Durham University ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

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