IDLab workshop: How the Reputation of Bank Top Managers Influences Company Performance

On February 14, 2025, as part of the IDLab scientific seminar, in collaboration with the Research Group "Analysis of Reputational Effects of Top Management in Banks," a report was presented on the impact of the reputation of top bank managers on the financial results of companies. The report was delivered by Marina Zavertiaeva, Senior Research Fellow at IDLab and Head of the Research Group, with co-authors Dmitry Kirpishchikov, Junior Research Fellow at IDLab and Senior Member of the Research Group, as well as Anastasia Kireecheva and Eva Chekmareva, Junior Members of the Research Group.

The study focused on how the reputation of bank directors, particularly those who worked in banks with revoked licenses, affects the financial results of major Russian companies. Since 2013, the Central Bank of Russia has been actively reorganizing the banking sector, imposing strict requirements on the reputation of top managers and owners of banks. As a result of these efforts, over 7,000 individuals have been added to the "blacklist," prohibiting them from managing banks or owning more than 10% of a bank's capital.
The analysis used data from the largest publicly traded companies included in the Moscow Exchange Broad Market Index for the period from 2013 to 2020. The study categorized directors into "good" (those who worked in banks with active licenses) and "bad" (those who worked in banks with revoked licenses). The results showed that the presence of "bad" directors on a company's board significantly reduces return on assets (ROA) in state-owned companies. Meanwhile, the influence of "good" directors was minimal in regular years, but during crises, their involvement could have either a positive or negative impact on the company.
The study offers new directions for further research, including the analysis of the role of directors in state-owned and private banks, the influence of board composition on corporate decisions, and long-term changes in the reputation of top managers. Seminar participants proposed additional ideas to improve the analysis, such as using standard deviation of indicators to assess their variability and further differentiating models for "good" and "bad" directors.