Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th century British Banks

Richard Grossman and Masami Imai

No 10367, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper utilizes data on the presence of prominent individuals?that is, those with political (e.g., Members of Parliament) and aristocratic titles (e.g., lords)--on the boards of directors of English and Welsh banks from 1879-1909 to investigate whether the appointment of well-connected directors enhanced equity value for bank shareholders. Our analysis of panel data shows that the appointment of connected directors did not increase the rate of return on bank equity. In fact, we find that the appointment of MPs to directorships had negative effects on bank equity returns. Our event-study analysis corroborates this finding, showing that a bank?s shares exhibited negative abnormal returns when their directors were elected to Parliament. Taken together, our results indicate that connected directors yielded little--or even negative--economic payoff to bank shareholders in pre-war Britain.

Keywords: Banks; Capital markets; Corporate governance; Economic history; Private finance (search for similar items in EconPapers)
JEL-codes: G34 N23 (search for similar items in EconPapers)
Date: 2015-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP10367 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Taking the lord's name in vain: The impact of connected directors on 19th century British banks (2016)
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th Century British Banks (2014)
Working Paper: Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th century British Banks (2014)
Working Paper: Taking the Lord’s Name in Vain: The Impact of Connected Directors on 19th century British Banks (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:10367

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP10367

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().