Is Corporate Governance Different for Bank Holding Companies?

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Abstract
We analyze a range of corporate governance variables as they pertain to a sample of bank holding companies (BHCs) and manufacturing firms. We find that BHCs have larger boards and that the percentage of outside directors on these boards is significantly higher; also, BHC boards have more committees and meet slightly more frequently. Conversely, the proportion of CEO stock option pay to salary plus bonuses as well as the percentage and market value of direct equity holdings are smaller for bank holding companies. Furthermore, fewer institutions hold shares of BHCs relative to shares of manufacturing firms, and the institutions hold a smaller percentage of a BHC's equity. These observed differences in variables suggest that governance structures are industry-specific. The differences, we argue, might be due to differences in the investment opportunities of the firms in the two industries as well as to the presence of regulation in the banking industry.