a director is not an outsider if he was an officer or had any business relationship with the BHC in any of the 14 years of the sample. (Adams & Mehran, 2012). In contrast, most cross-sectional studies can only classify directors based on current employee status or business relationships
Directors that are currently employed by the firm, retired employees of the firm, related company officers or immediate family members of firm employees are classified as executives. Non-executive directors are members of the Board who are not top executives, retired executives, former executives, relatives of the CEO or the chairperson of the Board, or outside corporate lawyers employed by the firm at any point during our sample period. Moreover, with respect to banks that adopt the two-tier
system, the assumption made is that the directors that belong to the supervisory
Board perform as non-executives ( (Panagiotis et al, 2007)