Listed Banks vs Cooperative Banks: Differences in Agency Problems with regards to CEO-Duality and Risk Taking analysed from an Ownership Perspective.

Abstract

This paper researches the relationship between risk-taking and CEO duality. This is analysed from an ownership perspective making a distinction between cooperative banks and listed banks. This paper will try to answer whether mutually owned banks also face the same agency theory problems as listed banks with regards to risk-taking and CEO duality. This is done by obtaining panel data on approximately 40 cooperative and 40 listed banks and analysing the effects CEO duality has on the z-score, which is a measure of bank risk. This papers finds a positive relation between CEO duality and risk-taking for listed banks and a negative relation between CEO duality and risk-taking for cooperative. This means that agency problems are less pronounced in cooperative banks however, clear conclusions cannot be made because, the bundle of governance arrangements and monitoring devices appears to be more relevant than the effect of one single variable, duality, in governance matters.