CEO power and bank risk in the UAE
The lessons from the 2008 global financial crisis show that excessive risk taking and governance failures contribute to the failure of several banks. As a result, the relationship between corporate governance mechanisms and risk taking has been the subject of many studies. However, extant studies re...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2020-09-01
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| Series: | Banks and Bank Systems |
| Subjects: | |
| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13971/BBS_2020_03_Tadele.pdf |
| _version_ | 1831719501203243008 |
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| author | Haileslasie Tadele Baliira Kalyebara |
| author_facet | Haileslasie Tadele Baliira Kalyebara |
| author_sort | Haileslasie Tadele |
| collection | DOAJ |
| description | The lessons from the 2008 global financial crisis show that excessive risk taking and governance failures contribute to the failure of several banks. As a result, the relationship between corporate governance mechanisms and risk taking has been the subject of many studies. However, extant studies report inconclusive results. Therefore, this study aims to investigate the relationship between CEO power and bank risk in the UAE using data over the period of 2015–2018 and a sample of 19 UAE banks. The study uses a Pearson pairwise correlation to analyze the relationship between CEO power and bank risk. In addition, a two-tailed t-test is used to examine the differences between conventional and Islamic banks in terms of CEO power and risk-taking. The results of the study show that CEO power measured using CEO duality and CEO tenure reduces risk. Furthermore, the paper indicates that larger boards and higher CEO ownership tend to increase risk. The study also reports that conventional banks have higher return variability, larger boards and powerful CEOs than Islamic banks. However, Islamic banks tend to have higher non-performing finances than conventional banks. The study provides important insights on the relationship between CEO power and bank risk and concurs with earlier studies. The findings can be of interest to policy makers and can be used as input data for the development of corporate governance mechanisms. Shareholders can also use the survey results as input when appointing a CEO for their banks. |
| first_indexed | 2024-12-21T02:39:57Z |
| format | Article |
| id | doaj.art-0b85887bbd844327b94509201e77d98c |
| institution | Directory Open Access Journal |
| issn | 1816-7403 1991-7074 |
| language | English |
| last_indexed | 2024-12-21T02:39:57Z |
| publishDate | 2020-09-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Banks and Bank Systems |
| spelling | doaj.art-0b85887bbd844327b94509201e77d98c2022-12-21T19:18:41ZengLLC "CPC "Business Perspectives"Banks and Bank Systems1816-74031991-70742020-09-0115311712810.21511/bbs.15(3).2020.1113971CEO power and bank risk in the UAEHaileslasie Tadele0https://orcid.org/0000-0001-8821-8589Baliira Kalyebara1https://orcid.org/0000-0002-0978-1304Ph.D., Assistant Professor of Finance, American University of Ras Al Khaimah, Ras Al KhaimahPh.D., Assistant Professor of Finance, American University of Ras Al Khaimah, Ras Al KhaimahThe lessons from the 2008 global financial crisis show that excessive risk taking and governance failures contribute to the failure of several banks. As a result, the relationship between corporate governance mechanisms and risk taking has been the subject of many studies. However, extant studies report inconclusive results. Therefore, this study aims to investigate the relationship between CEO power and bank risk in the UAE using data over the period of 2015–2018 and a sample of 19 UAE banks. The study uses a Pearson pairwise correlation to analyze the relationship between CEO power and bank risk. In addition, a two-tailed t-test is used to examine the differences between conventional and Islamic banks in terms of CEO power and risk-taking. The results of the study show that CEO power measured using CEO duality and CEO tenure reduces risk. Furthermore, the paper indicates that larger boards and higher CEO ownership tend to increase risk. The study also reports that conventional banks have higher return variability, larger boards and powerful CEOs than Islamic banks. However, Islamic banks tend to have higher non-performing finances than conventional banks. The study provides important insights on the relationship between CEO power and bank risk and concurs with earlier studies. The findings can be of interest to policy makers and can be used as input data for the development of corporate governance mechanisms. Shareholders can also use the survey results as input when appointing a CEO for their banks.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13971/BBS_2020_03_Tadele.pdfcommercial banksgovernanceIslamic banksmanagerial entrenchment |
| spellingShingle | Haileslasie Tadele Baliira Kalyebara CEO power and bank risk in the UAE Banks and Bank Systems commercial banks governance Islamic banks managerial entrenchment |
| title | CEO power and bank risk in the UAE |
| title_full | CEO power and bank risk in the UAE |
| title_fullStr | CEO power and bank risk in the UAE |
| title_full_unstemmed | CEO power and bank risk in the UAE |
| title_short | CEO power and bank risk in the UAE |
| title_sort | ceo power and bank risk in the uae |
| topic | commercial banks governance Islamic banks managerial entrenchment |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/13971/BBS_2020_03_Tadele.pdf |
| work_keys_str_mv | AT haileslasietadele ceopowerandbankriskintheuae AT baliirakalyebara ceopowerandbankriskintheuae |