The finding in this study that risk

The finding in this study that risks affect earnings is consistent with the
fundamental risk-return theory, and the importance assigned to risk management by many
scholars in this field. The finding underscores the importance of banking governance that
effectively limits risk taking at BHC, while showing that the current system of banking
governance, measure by Gov-score, does not significantly impact risk taking. Thus, the study’s findings that risk affects performance and is not effectively controlled by current
governance mechanisms make it imperative that effective governance mechanisms be
designed to prevent future crises.