Title: Does corporate governance enhance bank efficiency in Taiwan?

Authors: Chang-Sheng Liao

Addresses: School of Internet Economics and Business, Fujian University of Technology, Dongsanhuan Road, No. 999, Fuzhou City, Province of Fujian, China

Abstract: The purpose of this study is to investigate the relationship between bank efficiency and corporate governance in Taiwan. It aims to explain the effects of ownership structure, institutional investors' structure and manager turnover. The empirical results provide weak evidence to support the proposition that independent directors can improve bank efficiency. This study broke down the structure of institutional investors and found that when a higher percentage of banks were owned by domestic corporations, the efficiency-augmentation hypothesis was supported, whereas when a higher percentage of banks were owned by domestic trust funds, the efficiency-abatement hypothesis was supported. This study also found that in the Taiwanese banking industry in general, top executives of poorly performing banks are not more likely to lose their jobs and that, sometimes, boards did not appoint top executives based on ability but rather tended to appoint them based on the personal preferences of family board members.

Keywords: corporate governance; ownership structure; top executive turnover; X-efficiency; Taiwan.

DOI: 10.1504/IJBEM.2021.114406

International Journal of Business and Emerging Markets, 2021 Vol.13 No.2, pp.124 - 141

Received: 23 Sep 2019
Accepted: 02 Jun 2020
Published online: 20 Apr 2021 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article