Anginer, DenizDemirguc-Kunt, AsliHuizinga, HarryMa, Kebin2014-02-042014-02-042013-10https://hdl.handle.net/10986/16853This paper examines how corporate governance and executive compensation affected bank capitalization strategies for an international sample of banks in 2003-2011. "Good" corporate governance, which favors shareholder interests, is found to give rise to lower bank capitalization. Boards of intermediate size, separation of the chief executive officer and chairman roles, and an absence of anti-takeover provisions, in particular, lead to low bank capitalization. However, executive options and stock wealth invested in the bank are associated with better capitalization except just before the crisis in 2006. In that year, stock options wealth was associated with lower capitalization, which suggests that potential gains from taking on more bank risk outweighed the prospect of additional loss. Banks' tendencies to continue payouts to shareholders after experiencing negative income shocks are shown to reflect executive risk-taking incentives.en-USCC BY 3.0 IGOACCOUNTINGAFFILIATED ORGANIZATIONSAGENCY COSTSAGENCY PROBLEMSANTI-TAKEOVER PROVISIONANTI-TAKEOVER PROVISIONSASSETS RATIOBAILOUTSBANK ASSETSBANK CAPITALBANK CAPITALIZATIONBANK FAILUREBANK FAILURESBANK HOLDINGBANK HOLDING COMPANIESBANK MARKETBANK REGULATIONBANK RISKBANK VALUATIONBANKING CRISISBANKING INDUSTRYBANKSBOARD MEMBERSBOARD MEMBERSHIPBOOK VALUEBUSINESS CYCLECAPITAL ADJUSTMENTCAPITAL MARKETCAPITAL STRUCTURECAPITAL STRUCTURESCASH FLOWSCDSCEOCEOSCHECKSCHIEF EXECUTIVECOMMERCIAL BANKSCOMMON EQUITYCOMMON SHARECOMMON SHAREHOLDERCOMMON SHAREHOLDERSCOMMON SHARESCOMPANIES ACTCOMPANYCOMPENSATION PACKAGECOMPENSATION PACKAGESCOMPENSATION POLICIESCORPORATE GOVERNANCECORPORATE GOVERNANCE AFFECTCORPORATE GOVERNANCE AFFECTSDEBTDELAWAREDELTADEPOSITDEPOSIT INSURANCEDEVELOPMENT POLICYDIVIDEND PAYMENTDIVIDEND PAYMENTSDIVIDEND POLICIESDIVIDEND POLICYDIVIDENDSDUMMY VARIABLEDUMMY VARIABLESEQUITY CAPITALEQUITY CAPITAL MARKETEX ANTEEXPECTED VALUEFINANCIAL CRISISFINANCIAL DISTRESSFINANCIAL INSTITUTIONSFINANCIAL STUDIESFREE RIDERFREE RIDER PROBLEMSGOVERNANCE ISSUESGOVERNMENT BONDSGOVERNMENT GUARANTEESHUMAN CAPITALINCENTIVES OF SHAREHOLDERSINCOMEINCORPORATEDINDEPENDENT BOARDSINDEPENDENT DIRECTORINDEPENDENT DIRECTORSINSTITUTIONAL SHAREHOLDERINSURANCE PREMIUMINTERESTS OF SHAREHOLDERSINTERNATIONAL BANKINTERNATIONAL FINANCIAL CRISISISSUANCELIMITEDLOANLOWER LEVERAGEMANAGERSMARKET DATAMARKET VALUEMINORITY INTERESTSMINORITY SHAREHOLDERMINORITY SHAREHOLDER RIGHTSMONETARY FUNDMORTGAGEMORTGAGE-BACKED SECURITIESNEGATIVE INCOME SHOCKNEGATIVE INCOME SHOCKSNEGATIVE SHOCKNEGATIVE SHOCKSPAYOUTPENSIONPENSION RIGHTSPORTFOLIOPOSITIVE COEFFICIENTPOSITIVE COEFFICIENTSPRICE INCREASESPRICE MOVEMENTSPRICE RISKPRICE VOLATILITYPRINCIPLE OF SHAREHOLDER PRIMACYPRIVATE INVESTORSPROXYRATE OF RETURNRESERVESRETURNRETURN ON ASSETSRETURNSRISK CONTROLSRISK TAKINGRISK WEIGHTED ASSETSSAFETY NETSHARE OWNERSHIPSHAREHOLDERSHAREHOLDER INTERESTSSHAREHOLDER VALUESHAREHOLDERSSTOCK INVESTORSSTOCK ISSUANCESTOCK MARKETSTOCK OPTIONSTOCK OPTIONSSTOCK OWNERSHIPSTOCK PRICESUBORDINATED DEBTTAKEOVERTANGIBLE ASSETSTAXTIER 1 CAPITALTIER 2 CAPITALVALUATIONVALUATIONSWEALTHWorld Bank10.1596/1813-9450-6636