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Gender Diversity and Bank Misconduct

Arnaboldi, Francesca and Casu, Barbara and Gallo, Angela and Kalotychou, Elena and Sarkisyan, Anna (2020) Gender Diversity and Bank Misconduct. Working Paper. Cass Business School Centre for Banking Research Working Paper No 01/20. (Unpublished)

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Abstract

This paper investigates whether gender-diverse bank boards can play a role in preventing costly misconduct episodes. We exploit the fines received by European banks from US regulators to reduce endogeneity issues related to supervisory and governance mechanisms. We show that greater female representation significantly reduces the frequency of misconduct fines, equivalent to savings of $7.48 million per year. Female directors are more influential when they reach a critical mass and are supported by women in leadership roles. The mechanism through which gender diversity affects board effectiveness in preventing misconduct stems from the ethicality and risk aversion of the female directors, rather than their contribution to diversity. The findings are robust to alternative model specifications, proxies for gender diversity, reverse causality, country and bank controls, and sub-sample analyses.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Misconduct; Gender diversity; Board of directors; Banks
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
Depositing User: Elements
Date Deposited: 24 Feb 2021 15:51
Last Modified: 25 Feb 2021 14:15
URI: http://repository.essex.ac.uk/id/eprint/29939

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