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- Supervisory boards, financial crisis and bank performance: do board characteristics matter?Publication . Fernandes, Catarina; Farinha, Jorge; Martins, Francisco Vitorino; Mateus, CesárioFailures in governance, especially in regard to boards of directors, have been blamed for the 2007-2008 financial crisis. The increased public scrutiny regarding the actions and role of the board of directors in banks, following the crisis, inspires to examine whether and to what extent the characteristics of banks’ boards influence their performance in the crisis. Using a sample of 72 publicly listed European banks, we find that banks with more independent and busy boards experienced worse stock returns during the crisis. Conversely, the better performing banks had more banking experts serving as supervisory directors. Additionally, we find that gender and age diversity improved banks’ performance during the crisis; hence, diversity matters. We also construct a governance quality index on the basis of board characteristics and conclude that governance quality positively affects banks’ returns during the crisis. Overall, we find evidence that banks’ performance during the financial crisis is a function of their boards’ characteristics.
- Determinants of European Banks’ bailouts following the 2007–2008 financial crisisPublication . Fernandes, Catarina; Farinha, Jorge; Martins, Francisco Vitorino; Mateus, CesárioExtraordinary amounts of public funds and/or assistance were made available to banks since the onset of the 2007–8 financial crises. Governments worldwide have launched a massive bailout package to support banks in distress. Using a probit model, this article investigates the likelihood of bailouts following the financial crisis. Our results lead us to conclude that the governance characteristics of banks, specifically the characteristics of boards, bank risks, as well as bank-level and country-specific banking sector features, explain the likelihood of bailouts in the European banking sector. In particular, we find that board banking experience, longer directors’ tenure, less busy boards, and the existence of a corporate governance committee decrease the likelihood of banks participating in a bailout programme. Inversely, board independence, credit, and liquidity risks increase the probability of banks being bailed out. Furthermore, fewer limitations on banking freedom and greater openness of the banking sector have a harmful impact on the occurrence of bailouts. Our study therefore suggests relevant policy implications, which might help supervisors, regulators, and other public authorities in avoiding costly bailouts.
- Governo das sociedades, custos de agência e crise financeira: que relação?Publication . Fernandes, CatarinaO debate sobre o governo das sociedades tem ganho crescente relevo nos meios académico e empresarial desde o fim da década de 1980. Esse maior destaque foi originado por diversos fatores, dos quais se salientam a crise na Ásia, os escândalos financeiros que assolaram grandes empresas cotadas norte-americanas e algumas empresas de auditoria e, mais recentemente, a crise financeira mundial. Embora há muito defendida a necessidade de aperfeiçoar os instrumentos existentes e de descobrir novos mecanismos, de modo a encontrar um sistema de governo das sociedades que minimize os custos de agência, a crise financeira mundial com origem nos EUA veio dar-lhe novo “fôlego”. E, agora, com especial ênfase na banca. Falhas no governo das sociedades, em particular no setor bancário, têm sido apontadas como culpadas pela crise financeira global iniciada em 2007, só comparável à Grande Depressão. Assim, este artigo pretende, em primeiro lugar, apresentar uma caracterização genérica dos mecanismos de governo das sociedades, integrando no estudo os denominados custos de agência e, em seguida, analisar tais mecanismos no setor bancário, estabelecendo uma relação entre eles e a crise financeira. A pesquisa efetuada permite demonstrar a importância dos instrumentos de governo das sociedades na minimização dos custos de agência, nomeadamente no contexto da crise financeira. Ainda que o setor bancário tenha as suas especificidades, a investigação feita indica que existe uma relação entre aqueles instrumentos e a performance dos bancos e que fragilidades no governo das sociedades determinaram em larga medida a crise financeira.
- Board´s characteristics and the financial crisisPublication . Fernandes, Catarina; Farinha, Jorge; Martins, F. Vitorino; Mateus, CesárioThe 2007-2008 financial crisis is considered the worst financial crisis since the Great Depression and failures in governance, especially concerning boards, have been blamed for this financial turmoil. But, when dealing with governance issues, most research excludes financial firms from its analysis and is focused on US. So, we intend to fill this gap by analysing European banks. Also, why some banks suffered much more than others despite that they were exposed to the same macroeconomic factors? Can board’s features explain the variation of banks’ return during the crisis? And, which is the impact of the gender factor? Literature doesn’t answer these questions completely, so we intend to address it in our paper. Using a sample of 53 publicly listed banks from EMU countries, the main results suggest that banks whose executive directors are older and have more professional experience had better return during the crisis. Also, independence gains significance when combined with the gender factor.
- Bank governance and performance: a survey of the literaturePublication . Fernandes, Catarina; Farinha, Jorge; Martins, Francisco Vitorino; Mateus, CesárioThis paper seeks to review the theoretical and empirical literature on the relationship between bank governance and performance, providing a comprehensive understanding of the existing research and offering guidance for investors and regulators on the major points of consensus and disagreement among researchers on this issue. Although the question of what determines the levels of firms’ performance, with special emphasis on the role of the corporate governance, has long been the subject of substantial academic research, it gained increased attention in the banking industry in the last decade due to a series of financial scandals and, more recently, to the global financial crisis. In fact, in the wake of the 2007–2008 financial crisis, bank corporate governance mechanisms received heightened attention, accompanied by the renewed interest in the degree of effectiveness of such mechanisms, and their impact on performance. Given the vast number of influences on corporate performance, such as the numerous characteristics of the board of directors, there is an abundant literature on the determinants of performance. Thus, this paper tries to bring together this diverse body of knowledge into a coherent whole. Banks have unique attributes that interfere with the way in which the usual corporate governance mechanisms work. Thus, the main differences between banks and non-financial firms, which justify that some of the regularities found in the literature on the relationship between a set of corporate governance mechanisms and performance do not hold for banks, are also analysed. Then, we extensively review the literature on the board of directors and its impact on performance in the financial crisis and non-financial crisis periods. Finally, we also survey the (very) scarce research on the relationship between board characteristics and bank failures.
- Political connections and performance: a bibliographic coupling analysisPublication . Fernandes, Catarina; Pires, Rui A.R.The main purpose of this paper is to map the current research front (i.e., to identify the more recent contributions and detect the current trends) on political connections and performance field based on a systematic review of 112 papers published in refereed journals indexed to the Scopus database. Applying the bibliographic coupling method and using the VOSviewer software for the construction and visualisation of scientific maps of papers, journals and authors, the analysis conducted allows to establish how research has evolved in this area. The results show that numerous studies were developed in China and analyse the impact of political connections on performance in privatisation, initial public offering (IPO), and financing processes. Also, several research examines the influence of contextual factors in this relationship. The findings presented in this paper will enable future authors studying the influence of political connections on performance to focus their studies more effectively.
- Mapping the research on innovation in hotels: a bibliographic coupling analysisPublication . Fernandes, Catarina; Pires, Rui A.R.The main purpose of this paper is to map the current research front on innovation in hotels field based on a bibliometric analysis of 241 papers published in refereed journals indexed to the Scopus database. Applying the bibliographic coupling method and using the VOSviewer software for the construction and visualization of scientific maps of papers, the analysis conducted allows to establish how research has evolved in this area. Based on the findings obtained, it was possible identify and systematize the main areas of this topic: (1) technological innovation, (2) market orientation’ role in promoting innovation, (3) human capital as catalyst for innovation, (4) environmental innovation, (5) performance as an innovation outcome, (6) service innovation, (7) absorptive capacity and holistic innovation, (8) innovation in time of crisis and (9) learning approach as a source for innovation. The evidence demonstrates some shortcomings in the literature, which represent opportunities for further research.
- Management and mobilization of intellectual capital using strategic management accounting practices: a theoretical approachPublication . Pires, Rui A.R.; Alves, Maria C.G.; Fernandes, CatarinaThis paper aims to discuss the role of strategic management accounting (SMA) practices to manage and mobilize intellectual capital (IC). Firstly, the definition and components of IC (i.e., human capital (HC), structural capital (SC) and relational capital (RC)) are presented and discussed in order to understand which they are and which they cover. Secondly, the definition and perspectives of SMA are presented and analyzed. Finally, the link between SMA practices and some IC resources is established and discussed. SMA practices enable the management and mobilization of IC resources such as innovation capacity (e.g., life cycle costing, integrated performance measurement and target costing), organizational learning and flexibility (e.g., integrated performance measurement, strategic pricing and target costing) and knowledge resources embedded in the organizational’ external relationships (e.g., attribute costing, integrated performance measurement, strategic pricing and target costing). Thus, this paper contributes to an important emerging issue of research regarding the mobilization of IC, stressing the role of SMA, and provides some research opportunities to future development.