When Supervision Becomes Lived Authority: Governance Under Continuous Oversight in European Banking

Contemporary organizations increasingly operate under external scrutiny, as authorities monitor, assess, and influence decision-making on an ongoing basis. While prior research has examined the structural features of such oversight, little is known about how it is experienced and negotiated by those responsible for governance. This study addresses that gap in a revealing setting: post-crisis European banking supervision. Drawing on fifty-eight interviews with directors and senior managers of Spanish credit institutions, using phenomenology and thematic analysis, it examines how supervisory scrutiny becomes subjectively experienced authority in everyday governance work. The analysis identifies four experiential structures. Financial stability emerges as the dominant organizing principle shaping institutional purpose, strategic discretion, and professional identity. Supervision transforms corporate governance from within, as anticipated supervisory scrutiny becomes embedded in deliberation and decision-making. Supervisory risk emerges as a distinct uncertainty embedded in governance judgment. Sustained oversight reshapes the supervisor–supervisee relationship through behavioral and strategic responses, including signaling, impression management, and anticipatory compliance. The study shows that supervision’s most important consequences arise not only from formal rules or episodic intervention, but from how supervisory scrutiny is internalized, anticipated, and enacted in governance decision-making, reshaping authority, judgment, and professional identity in what we coin institutionalized evaluative authority.