Characteristics of the Board and Bank Risk-Taking : A U.S. to European Comparison
Keywords:
Banks, , Board of directors, Risk-takingAbstract
The study provides a comparison of the association between board's characteristics and risk-taking in European and United States banks. European banks have larger boards, fewer independent directors, more often a risk committee and less duality than United States banks. For both areas, the size of the board is negatively associated with risk and audit committee size is positively associated with risk when it is larger than 4. Larger boards at banks are necessary to adequately monitor complex issues and staff specialized committees. Some board characteristics exhibit a different association with risks at European and United States banks. Risk-taking is negatively associated with the percentage of independent directors and the size of the risk committee in the United States, and with duality in Europe
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