Chapter 9: A Survey of Corporate Governance in Banking: Characteristics of the Top 100 World Banks
Rowan Trayler Banking worldwide is a high proﬁle industry and plays an important role not only in a country’s economy but the world’s as well. Operations of the world’s largest banks span many countries and play a key role in society. The banking industry has a special function in ensuring the stability and integrity of the worldwide ﬁnancial system. If one of the world’s largest banks were to fail the fear of the consequences is of great concern to bank regulators and governments worldwide. Banks are diﬀerent to nonﬁnancial corporations due to their public purpose and the position of trust that they hold in the community. Corporate governance and the role of the directors in banking has never been more important, not only has there been a large number of changes to corporate governance regulations but bank management has to address the issues in the implementation of the Bank for International Settlements (BIS) Basel II capital adequacy accord. This survey of the world’s top 100 banks is to determine if there are similarities or diﬀerences in their corporate governance characteristics as measured by performance and risk. In 2002 the Sarbanes-Oxley Act (SOX) came into force as a reaction to the high proﬁle corporate failures of Enron, WorldCom, Parmalat and others. These failures also highlighted executive compensation arrangements that many investors questioned as being excessive. Various countries around the world introduced similar corporate governance legislation to SOX and stock exchanges tightened their listing rules in terms...
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