A Theory of Board Control and Size

Harris, Milton; Raviv, Artur
July 2008
Review of Financial Studies;Jul2008, Vol. 21 Issue 4, p1797
Academic Journal
This article presents a model of optimal control of corporate boards of directors. We determine when one would expect inside versus outside directors to control the board, when the controlling party will delegate decision-making to the other party, the extent of communication between the parties, and the number of outside directors. We show that shareholders can sometimes be better off with an insider-controlled board. We derive endogenous relationships among profits, board control, and the number of outside directors that call into question the usual interpretation of some documented empirical regularities.


Related Articles

  • Seven Action Steps to Improve Governance.  // Financial Executive;Dec2002, Vol. 18 Issue 9, p11 

    The article details a seven-step checklist which was developed by the internal audit and risk consulting company, Protiviti. The questions on the checklist focus attention on the processes that lead to ethical business practices, personal accountability for corporate governance, and compliance...

  • Corporate governance in the post Sarbanes–Oxley period: Compensation disclosure and analysis (CD&A) Dalton, Dan R.; Dalton, Catherine M. // Business Horizons;Mar2008, Vol. 51 Issue 2, p85 

    Abstract: In recent years, the entire fabric of corporate governance, certainly in the United States, has dramatically changed. With the passage of what has colloquially become known as SOX (the Sarbanes–Oxley Act of 2002), US-based corporations have operated under stricter governance...

  • New Challenges For Corporate Governance. Beatty, David // Rotman Management;Fall2009, p58 

    The article reports on the new challenges faced by the board directors of corporations during the economic recession in the U.S. It notes that the recovered Sarbanes-Oxley Act of 2002 (SOX) reforms will enable chief executive officers (CEOs) of corporations to adapt a new governance reform that...

  • Some Thoughts for Boards of Directors in 2008.  // Venulex Legal Summaries;2007 Q3, p1 

    The article highlights various corporate governance issues facing boards of directors in the U.S. following the implementation of the Sarbanes-Oxley Act of 2002. According to the author, the key challenge for the directors is the responsibility of promoting long-term value for stockholders...

  • Female Board Presence and the Likelihood of Financial Restatement. Abbott, Lawrence J.; Parker, Susan; Presley, Theresa J. // Accounting Horizons;Dec2012, Vol. 26 Issue 4, p607 

    This paper investigates the impact of one form of board diversity on the incidence of financial restatement. More specifically, we hypothesize that there is a negative relation between female board presence (defined as whether or not a board has at least one female director) and the likelihood...

  • CATALYSTS FOR CHANGE IN BOARD GOVERNANCE PRACTICES: THE CASE OF THE INTRODUCTION OF NATIONAL POLICY 58 - 201 IN CANADA. Khemakhem, Hanen; Gélinas, Patrice; Baillargeon, Lisa // Journal of Legal, Ethical & Regulatory Issues;2014, Vol. 17 Issue 2, p129 

    This paper investigates the impact of the adoption of National Policy 58-201 in 2005 on board governance practices in Canada. We find that National Policy 58 - 201, which suggests that issuers adopt voluntarily an array of board governance best practices, has improved board governance practices...

  • Board Composition and Corporate Social Responsibility: An Empirical Investigation in the Post Sarbanes-Oxley Era. Zhang, Jason; Zhu, Hong; Ding, Hung-bin // Journal of Business Ethics;May2013, Vol. 114 Issue 3, p381 

    Although the composition of the board of directors has important implications for different aspects of firm performance, prior studies tend to focus on financial performance. The effects of board composition on corporate social responsibility (CSR) performance remain an under-researched area,...

  • Meet Members' Governance Expectations.  // Credit Union Directors Newsletter;Dec2011, Vol. 35 Issue 12, p4 

    The article offers governance conventions and expectations from boards of directors, according to Rising Above Enterprises chief executive officer (CEO) Jeff Rendel. Rendel says that regulators, board members , and all stockholders are focusing on governance oversight. He also states that...

  • Do Active Boards of Directors Add Value to Their Firms? Xiaodong Qiu; Largay, III, James A. // Academy of Management Perspectives;Feb2011, Vol. 25 Issue 1, p98 

    The article presents an overview of a study in the United States concerning the value of active boards of directors to their firms. Researchers Ivan Brick of Rutgers University and N. K. Chidambaran of Fordham University examined the effect of board activity on firm value, the determinants of...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics