Interpersonal population diversity in the bank boardroom and corporate misconduct

IF 1.1 Q3 BUSINESS, FINANCE
Chrysovalantis Vasilakis, John Thornton
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引用次数: 0

Abstract

PurposeThis research empirically establishes that the interpersonal population diversity of executive board members partly explains the differences in financial misconduct across US banks. It advances the hypothesis that heterogeneity in the composition of an interpersonal population and diverse traits of board members, originating from the prehistoric course of the exodus of Homo sapiens from East Africa tens of thousands of years ago, is an important factor explaining the effectiveness of executive board monitoring with respect to a bank engaging in financial misconduct. The underlying intuition is that population-fragmented societies, characterized by mistrust, preference heterogeneity and corruption, find it difficult to sustain collective integrity action.Design/methodology/approachEmploying a panel of US banks from 1998 to 2019 we find that adding directors from countries with different levels of interpersonal population diversity is positively associated with financial misconduct as measured by enforcement and class action litigation against banks by the main regulatory agencies. Furthermore, we document that the more population-diverse bank boards are more likely to commit misconduct, consistent with a mechanism of inter-generational transmission of cultural norms of mistrust and non-cooperation.FindingsWe find that adding directors from countries with different levels of interpersonal population diversity is positively associated with financial misconduct as measured by enforcement and class action litigation against banks by the main regulatory agencies. These results are robust to controlling for bank-specific variables, including other board characteristics, and to the use of instrumental variables.Practical implicationsThe findings suggest that reducing financial misconduct by banks likely requires reducing the interpersonal population diversity of banks’ executive boards.Originality/valueWe show how bank boards with different interpersonal population diversity impact the likelihood of engaging in misconduct provides evidence of the microeconomic effects of interpersonal population diversity. We show the negative results of diversity that they can have on the management of a firm given that populated diverse boards are more likely to lead to higher levels of misconduct. Our evidence reveals that banks having interpersonal population fragmented boards are more likely to commit misconduct given the cultural norms of mistrust and the lack of societal cohesiveness.
银行董事会中的人际关系多样性与公司不当行为
目的 本研究通过实证研究证实,执行董事会成员的人际群体多样性在一定程度上解释了美国各银行金融不当行为的差异。该研究提出了一个假设,即源于数万年前智人从东非大迁徙的史前进程的人际人口构成异质性和董事会成员的多样化特征,是解释执行董事会对从事金融不当行为的银行进行有效监督的一个重要因素。其基本直觉是,以不信任、偏好异质性和腐败为特征的人口分散型社会很难维持集体诚信行动。设计/方法/途径我们利用 1998 年至 2019 年的美国银行面板研究发现,根据主要监管机构对银行的执法和集体诉讼来衡量,增加来自不同人际多样性国家的董事与金融不当行为呈正相关。此外,我们还发现,人口越多元化的银行董事会越有可能实施不当行为,这与不信任和不合作文化规范的代际传播机制是一致的。研究结果我们发现,根据主要监管机构对银行的执法和集体诉讼情况,增加来自不同人际多元化国家的董事与金融不当行为呈正相关。这些结果在控制银行特定变量(包括其他董事会特征)和使用工具变量后都是稳健的。研究结果表明,要减少银行的金融不当行为,可能需要减少银行执行董事会的人际多样性。我们展示了多样性可能对公司管理产生的负面影响,因为人际多样性的董事会更有可能导致更高水平的不当行为。我们的证据显示,在不信任的文化规范和缺乏社会凝聚力的情况下,人际关系分散的银行董事会更有可能实施不当行为。
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来源期刊
CiteScore
6.50
自引率
0.00%
发文量
6
期刊介绍: The objective of the Journal is to publish papers that make a fundamental and substantial contribution to the understanding of accounting phenomena. To this end, the Journal intends to publish papers that (1) synthesize an area of research in a concise and rigorous manner to assist academics and others to gain knowledge and appreciation of diverse research areas or (2) present high quality, multi-method, original research on a broad range of topics relevant to accounting, auditing and taxation. Topical coverage is broad and inclusive covering virtually all aspects of accounting. Consistent with the historical mission of the Journal, it is expected that the lead article of each issue will be a synthesis article on an important research topic. Other manuscripts to be included in a given issue will be a mix of synthesis and original research papers. In addition to traditional research topics and methods, we actively solicit manuscripts of the including, but not limited to, the following: • meta-analyses • field studies • critiques of papers published in other journals • emerging developments in accounting theory • commentaries on current issues • innovative experimental research with strong grounding in cognitive, social or anthropological sciences • creative archival analyses using non-standard methodologies or data sources with strong grounding in various social sciences • book reviews • "idea" papers that don''t fit into other established categories.
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