Banks (amongst many other large corporations) have suffer reputational problems. Simply, many members of the public do not trust the motives of banking executives. Further, there is a dearth of empirical research about bank boards, because banks are routinely omitted from board research. So, when Anastasia Stepanova (Russia) discussed her perception vs. reality study of bank boards, I pricked my ears up. Stepanova's aim was to compare whether perceived relationships between board attributes and market performance were consistent with actual market performance.
Stepanova modelled data from 470 banks around the world. She studied three attributes in particular (the percentage of independent directors, the size of the board and the ownership concentration) and compared perceived market performance with actual performance metrics. The research produced some very interesting results, as follows:
While further analysis will be required to understand the implications for bank boards and shareholders (and the market more generally), the results highlight that differences between perception and reality are subtle and that they occur at the level of discrete board attributes.
Stepanova's consistent use of the term 'corporate governance' (when she was referring to attributes of boards) was notable. It demonstrated that she conceives corporate governance as being a structure. This conception was common in the 1980s, 1990s and into the 2000s. However, it is being largely superceded by the idea that corporate governance is a process or a policy framework. As a result, Stepanova may benefit from updating her terminology, to assist readers more familiar with contemporary conceptions of the phemonenon.
Thoughts on corporate governance, strategy and boardcraft; our place in the world; and other topics that catch my attention.