Fordham Business Student Research Journal



The 2007-2008 financial crisis was a pervasive shock that profoundly impacted the financial services industry. Often described as the worst economic crisis since the Great Depression, this event provides a unique opportunity to examine the consequences experienced by members of boards of directors and top management at bank holding companies for what shareholders may perceive as failures in oversight and excessive risk-taking. This study examines whether shareholders penalized top management at banks and provides some new evidence of the crisis’s impact on management careers. Using the 36 largest American bank holding corporations by assets as a sample, we examine director re-election percentages and other director, management, and firm characteristics to determine the extent to which shareholders indicate their disapproval of banks’ boards of directors during and after the financial crisis. By employing various methods of empirical analysis, including ordinary least squares regressions, two-sample t-tests, and Wilcoxon rank-sum tests, we have determined with statistical confidence that the average number of shareholder votes in favor of bank director nominees decreased significantly at the end of and in the years immediately following the financial crisis. Further, we find that much of this decrease in shareholder approval can be attributed to several firm, board, and director-specific characteristics. These results have important corporate governance policy implications and may suggest additional avenues of exploration regarding this or other such industry-wide or macroeconomic crises.