Boardroom tenure, financial expertise and bank performance: a nonlinear dynamic framework

This research investigates the influence of boardroom tenure and financial expertise on US bank performance in a nonlinear dynamic framework. To this aim, we utilize a sample of 305 banks during the 2010-2021 period, and we implement three empirical methodologies: GMM analysis, threshold technique, and quantile approach. Our findings reveal that the individual and interaction effects of boardroom financial expertise and tenure on bank performance are positive. Also, we provide evidence of an inverted U-shaped relation between boardroom tenure and bank performance, and between the board's financial expertise and bank performance. Moreover, threshold analysis shows the presence of threshold effects in the relationship between boardroom tenure, expertise, and performance. Quantile results demonstrate that boardroom financial expertise improves the performance of high-performing banks. In contrast, boardroom tenure enhances the performance of low-performing banks but diminishes the performance of their high-performing counterparts.