Endogenously Chosen Boards of Directors and Their Monitoring of Management

Endogenously Chosen Boards of Directors and Their Monitoring of Management
Author: Benjamin E. Hermalin
Publisher:
Total Pages:
Release: 1998
Genre:
ISBN:

This paper develops a model in which the effectiveness of the board's monitoring of the CEO depends on the board's independence. The independence of the new directors is determined through negotiations (implicit or explicit) between the existing directors and the CEO. The CEO's bargaining position, and thus his influence over the board- selection process, depends on an updated estimated of the CEO's ability based on his prior performance. Many empirical findings about board structure and performance arise as equilibrium phenomena in this model. We also explore the implications of this model for proposed regulations of corporate governance structures.

Endogenously Chosen Boards of Directors and Their Monitoring of the CEO.

Endogenously Chosen Boards of Directors and Their Monitoring of the CEO.
Author: Benjamin E. Hermalin
Publisher:
Total Pages:
Release: 1998
Genre:
ISBN:

How can boards be chosen through a process partially controlled by the CEO, yet, in many instances, still be effective monitors of him? We offer an answer based on a model in which board effectiveness is a function of its independence. This, in turn, is a function of negotiations (implicit or explicit) between existing directors and the CEO over who will fill vacancies on the board. The CEO's bargaining power over the board-selection process comes from his perceived ability relative to potential successors. Many empirical findings about board structure and performance arise as equilibrium phenomena of this model.

The Handbook of the Economics of Corporate Governance

The Handbook of the Economics of Corporate Governance
Author: Benjamin Hermalin
Publisher: Elsevier
Total Pages: 762
Release: 2017-09-18
Genre: Business & Economics
ISBN: 0444635408

The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward

Boards at Work : How Directors View their Roles and Responsibilities

Boards at Work : How Directors View their Roles and Responsibilities
Author: Philip Stiles
Publisher: OUP Oxford
Total Pages: 182
Release: 2001-03-29
Genre:
ISBN: 0191580937

Boards of directors are coming under increasing scrutiny in terms of their contribution in monitoring and controlling management, particularly in the wake of high-profile corporate frauds and failures, and also their potential to add value to organizational performance through involvement in the strategy process and through building relationships with key investors. Despite the importance of these issues, not only to organizations but also arguably to national competitiveness, the nature of board activity remains largely a black box, clouded by prescriptions, prejudices, and half-truths. This book responds to calls for greater scrutiny of boards of directors with an in-depth examination of directors of UK organizations, drawing on the accounts of directors themselves as to their roles, influence, and the potential and limits to their power. Much work on boards of directors has labelled the board as a rubber stamp for dominant management, and non-executive directors in particular have been variously described as poodles, pet rocks, or parsley on the fish. Such accounts are rooted in assumptions of board activity that are essentially adversarial in nature, and that the solution to the 'problem' of reconciling the interests of managers with those of shareholders is to increase the checks and balances available to the board of directors. The findings of this study show that boards, in many cases, are far more than passive rubber stamps for management and that non-executives are encouraged to act as trusted advisers to the executives and the chief executive, rather than solely monitors of executive activity. Boards are important mechanisms in maintaining the strategic framework of the organization through setting the boundaries of organizational activity. The potential of the board members, in particular the non-executives, to fulfil such a mandate depends on a number of factors, including ability, willingness to engage with the organizational issues, and the degree of knowledge they have relevant to the host firm. Above all, the degree of trust built between members of the board, and between the board and key external constituencies, is at the heart of effective board behaviour.

Inside the Boardroom

Inside the Boardroom
Author: Richard Leblanc
Publisher: John Wiley & Sons
Total Pages: 340
Release: 2010-02-10
Genre: Business & Economics
ISBN: 0470739959

Distinguished governance experts offer cures for what ails our boards of directors In light of corporate malfeasance in recent years, the governance of corporations has been receiving great attention from regulators, researchers, shareholders, and directors themselves. Based on Richard Leblanc's in-depth five-year study of 39 boards of directors of both for- and not-for-profit organizations, Building a Better Board goes behind the scenes to reveal the inner workings of boards of directors, including how they make decisions. Recently chosen as one of Canada's "Top 40 Under 40"(TM), Dr Richard Leblanc is an award-winning teacher and researcher, certified management consultant, professional speaker, professor, lawyer and specialist on boards of directors. He can be reached at [email protected]. James Gillies, PhD (Toronto, Ontario, Canada), is Professor Emeritus at the Schulich School of Business, York University, where he serves as Chair of the Canada-Russia Corporate Governance Program.

The Director's Manual

The Director's Manual
Author: Peter C. Browning
Publisher: John Wiley & Sons
Total Pages: 213
Release: 2016-02-01
Genre: Business & Economics
ISBN: 111913336X

Directors: Improve Board Performance The Director's Manual: A Framework for Board Governance offers current and aspiring board members essential up-to-date governance guidance that blends rigorous research-based information with the wisdom found only through practical, direct experience. The book's flexible approach to solving governance issues reflects the authors' belief that no two boards and the cultural dynamics that drive them are the same. As such, the advice offered reflects recognizable leadership dynamics and real world, relevant organizational situations. The book's two authors, Peter C. Browning, an experienced CEO and member of numerous boards and William L. Sparks, a respected organizational researcher, combine their individual experiences and talents to create a book that is both innovative and applicable to directors in any industry sector. Specific best practice guidance is designed to help board members and their directors understand the unique strengths and challenges of their own board while at the same time provide targeted information that drives needed improvements in board performance and efficiency. Specifically, this book will help board members: Explore practical advice on key issues, including selection, meeting schedules, and director succession Consider board performance from multiple perspectives, including cultural and group dynamics Discover how to effectively manage classic problems that arise when making decisions as a group Access a comprehensive set of assessment questions to test and reinforce your knowledge The Director's Manual: A Framework for Board Governance offers practical advice to guide you as you lead your organization's board.

Board Monitoring and Endogenous Information Asymmetry

Board Monitoring and Endogenous Information Asymmetry
Author: Jie Tian
Publisher:
Total Pages: 38
Release: 2013
Genre:
ISBN:

Boards of directors are frequently criticized for their lack of monitoring in executive decision making. Increasing board effort to reduce information asymmetry between executives and shareholders is commonly viewed as desirable. This study challenges this common view by demonstrating that active monitoring can reduce the CEO's incentives to exert effort to acquire useful information for decision making. In particular, I model a CEO who has superior ability to acquire, process and interpret information relevant to investment decisions. I show that a board that actively solicits information from the CEO is beneficial only if the board is able to provide a sufficiently accurate evaluation of the information acquired by the CEO. If the board does not have the expertise to provide such an evaluation, it is better for the board to be passive and not interfere with the CEO's decisions. My findings highlight the subtleties in monitoring an expert and show that when the board does not have the expertise, information asymmetry is endogenously created to provide incentives for CEOs to make efficient investment decisions.

Corporate Board of Directors

Corporate Board of Directors
Author: Ismail Lahlou
Publisher: Springer
Total Pages: 204
Release: 2018-12-26
Genre: Business & Economics
ISBN: 3030050173

Corporate governance, a subject that a few decades ago escaped the attention of all but a handful of academics and shareholders, has gradually become a central concern worldwide. This book contributes to the existing literature on the structure and effectiveness of corporate boards. It comprises three topics that address distinct research questions on board structure, the deployment of board resources to monitoring and advisory duties, and the use of equity-based incentives in the compensation packages of directors. Firstly, the book provides strong new evidence on the importance of corporate board functions in value creation. Secondly, it provides some evidence of the potential conflict between the two primary functions of corporate boards. The results indicate that while the board’s advising quality weakens when the board is principally devoted to monitoring duties, the presence of advisory directors on the board does not have any impact on the effectiveness of board oversight, which offers a more complete view on the tradeoffs between the board’s two major functions. Finally, the results suggest that the closer directors' compensation is tied to the firm's stock, the more consistent corporate acquisition decisions are with shareholder interests.

The Effectiveness of Boards of Directors of State Owned Enterprises in Developing Countries

The Effectiveness of Boards of Directors of State Owned Enterprises in Developing Countries
Author: Maria Vagliasindi
Publisher: World Bank Publications
Total Pages: 32
Release: 2012
Genre:
ISBN:

This paper aims to shed some new light on the conditions needed to ensure the effectiveness of Boards of Directors of state owned enterprises with a focus on infrastructure sectors. In the case of developing countries, empirical studies have found evidence of positive links between the composition of the Board of Directors and financial performance. Yet the lack of solid theoretical foundations, and in some cases poor data availability, makes the conclusions of most studies weak. Several policy recommendations emerge from the review of the economic literature and evidence from case studies. First, the introduction of a sufficient number of independent directors emerges as an important corporate governance milestone. Empowering them to exercise effective monitoring of management, however, may prove to be a formidable challenge for of state owned enterprises. More attention to board procedures, particularly related to the Board selection and evaluation process, is essential, to produce the necessary insulation of Boards from government interference. Ensuring sufficient continuity of services to directors is particularly crucial to improve corporate governance. In addition, other factors that may reduce directors' ability to monitor corporate activities, such as the age profile and the number of Boards on which they sit, need to be handled more carefully.

Governance, Directors and Boards

Governance, Directors and Boards
Author: Mahmoud Ezzamel
Publisher: Edward Elgar Publishing
Total Pages: 560
Release: 2005
Genre: Boards of directors
ISBN:

This unique volume brings together contributions on corporate governance published in various disciplines, including accounting, economics, finance and management. Mahmoud Ezzamel presents a collection of seminal papers that focus on the relationship between boards of directors and corporate governance. Governance, Directors and Boards investigates such important issues as the composition of boards of directors, their key overall roles as mechanisms of governance, the impact of the board on the nature of decision making in contemporary organisations, and the role of the relationship between the board and the determination of executive remuneration.