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.