Board structure and tail and systemic risk-taking: Evidence from European banks

We study whether the board structure before the crisis is related to the banks ' risk exposure under stressed financial market conditions, at both individual and systemic level. Moreover, we investigate whether this relation changes for the Systemically Important Banks (SIBs), characterized by a higher complexity and the implicit too-big-to-fail guarantee. Based on a sample of 40 European banks, we find that banks with larger boards and lower number of meetings are associated with higher tail and systemic risk. After controlling for the systemic relevance of banks in our sample, we find that board size is especially important for SIBs, while there is no evidence for board independence. Overall, our results reveal the specialness of SIBs ’ corporate governance mechanisms