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Journal of Banking & Finance Vol. 96 2018

Turnover threat and CEO risk-taking behavior in the banking industry

Zhongdong Chen1; Alireza Ebrahim2

1 University of Northern Iowa · 2 Office of the Comptroller of the Currency

Abstract

We examine how the threat of turnover affects bank CEOs' risk-taking behavior. Using a sample of 212 U.S. banks from 1995 to 2010, in contrast with prior studies focusing on non-banking firms, we find a non-monotonic relationship between CEO turnover threat and CEO risk-taking behavior in the banking industry. Bank CEOs increase their risk-taking when the perceived turnover threat is moderate but reduce risk-taking when turnover threat is more imminent. This effect tends to concentrate on banks with a majority of independent directors.

DOI
10.1016/j.jbankfin.2018.08.007
Volume
96
Pages
87-105
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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