Browsing by Author "Gontarek, Walter"
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Item Open Access CEO chairman controversy: evidence from the post financial crisis period(Springer, 2020-07-13) Gontarek, Walter; Belghitar, YacineRegulators generally discourage bank CEOs also holding the role of board Chairman, as this governance structure can hinder independent decision-making and effective risk oversight. This study examines the issue of CEO Duality, identifying a positive relation to greater risk-taking across a battery of sensitivity tests. In further analysis, the study controls for differences in supervisory monitoring levels to examine its impact. Banks led by CEO Chairmen which are subject to lower levels of supervision continue to report a robust association to risk-taking, as before. However, this association dissipates for banks which are subject to heightened supervisory monitoring. These findings indicate that agency costs related to Duality may be moderated by greater regulation. This paper weighs-in on the controversy relating to a single contentious governance structure (i.e., CEO Duality), thus informing boards, regulators and researchers of the need to consider the overall interplay of monitoring mechanisms.Item Open Access Risk Governance: Examining its Impact Upon Bank Performance and Risk(2017-04) Gontarek, Walter; Belghitar, YacineThis study examines the emergence of risk governance arrangements in US bank holding companies (BHCs) and tests for their impact upon performance and risk profiles. Following the financial crisis, regulators introduced several new risk governance processes, including the adoption of Risk Appetite arrangements and the establishment of Risk Committees, both board level features. In this study, a research gap is unearthed with respect to risk governance practices and their impact upon BHC performance and risk measures. The motivation of this research is to validate the adoption of these board-level practices in an evidence-based framework. The empirical research method relies on the collection of a unique data set. The sample covers a significant dollar-weighted portion of the US banking system. Multivariate analysis facilitates the testing of risk governance mechanisms to outcome variables, while controlling for firm-specific and standard corporate governance variables. The practical implication of this study with respect to Risk Appetite is clear. BHCs that practice Risk Appetite arrangements exhibit improved performance and lower realised loan losses. In contrast, while some limited evidence is presented that the marketplace may reward BHCs for certain composition aspects of the Risk Committee, the overall results suggest that the requirement for a Risk Committee has little impact to BHC’s operating performance and risk measures. In terms of academic contribution, this study examines two major risk governance mechanisms within a common framework, presenting evidence of a significant and positive impact of the board level articulation of Risk Appetite arrangements to a suite of BHC performance measures and a negative association to loan losses. As the first known empirical research study of Risk Appetite, it confirms that this board level mechanism should be included as an explanatory variable in bank or risk governance related empirical research studies. These findings provide industry practitioners (including BHC chief executive officers and board members) convincing arguments for the immediate adoption of Risk Appetite arrangements. US Regulators, who introduced Risk Appetite requirements in 2014 for larger BHCs, are presented with validation by this study for wider adoption of this risk governance mechanism, even if such practices are voluntarily adopted by BHCs. As signs begin to emerge in the United States of the possible relaxation of the regulatory requirements of certain aspects of the Dodd-Frank Act, this study contributes to this debate in a timely fashion by testing the veracity of two key supervisory-driven risk governance practices aimed at the boardroom in an evidence-based evaluation.Item Open Access Risk governance: examining its impact upon bank performance and risk-taking(Wiley, 2018-09-21) Gontarek, Walter; Belghitar, YacineAs policy-makers in the United States contemplate a relaxation of financial regulation, our study contributes to this dialogue by testing the veracity of heightened standards of risk governance activities for US bank holding companies (BHCs). Our study examines evidence relating to the adoption of these standards by BHCs following regulatory intervention. We find that board-level risk appetite practices have a profound association upon BHC performance and tail risk. Our estimates show that BHCs which adopt risk appetite practices exhibit a significant improvement in headline performance and reduced tail risk measures. Our research is relevant to academics by identifying the significance of this risk governance practice which has been introduced by global regulators. For practitioners (including board members, risk managers, policy-makers and regulators), our study validates the efficacy of risk appetite frameworks as the future shape of financial regulation is being actively debated in the US.