Faculty Publications


Corporate governance and the market impact of the Financial Services Modernization Act of 1999 on bank returns and trading volume

SelectedWorks Author Profiles:

Carl J. Pacini

Document Type


Publication Date


Date Issued

January 2005

Date Available

April 2014




Recent deregulation of financial services by the Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act (GLB), places more reliance on corporate governance to oversee the actions of financial institutions. We examine whether corporate governance variables explain bank shareholder reaction to GLB passage. We find that banks with better board oversight react favorably to the GLB and banks with less effective board monitoring react less favorably to the GLB. Banks with lower leverage, lower insider ownership, less board activity, a smaller board, fewer inside directors, and less visibility respond more positively to the GLB. Results indicate investor approval of the legislative effort to increase the role of corporate governance in the banking industry and affirm the importance of effective corporate oversight among financial institutions.


Abstract only. Full-text article is available only through licensed access provided by the publisher. Published in Journal of Economics and Finance, 29(1), 46-72. Members of the USF System may access the full-text of the article through the authenticated link provided.




Springer New York LLC

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.