Dummy variable (Aebi, 2012)
 
We expect that a CRO has more power if he reports directly to the board of directors. This is important if the CEO and CRO have conflicting interests, and the CEO focuses on a maximization of sales, assets, and profit growth rates while the CRO’s main concern is to keep in check the risk taken to attain these goals.  (Aebi, 2012)
 
Banks, in which the CRO directly reports to the board of directors and not to the CEO (or other corporate entities), exhibit significantly higher (i.e., less negative) stock returns and ROE during the crisis   (Aebi, 2012)