Journal of Financial Economics Vol. 141 No. 3 2021
Death by committee? An analysis of corporate board (sub-) committees
Abstract
Theoretical models of groups suggest that sub-group usage can affect communication among members and group decision-making. To examine the trade-offs from forming sub-groups, we assemble a detailed dataset on corporate boards (groups) and committees (sub-groups). Boards have increasingly used committees formally staffed entirely by outside directors. Our data show that twenty-five percent of all director meetings occurred in such committees in 1996; this increased to 45% by 2010. Our evidence suggests that granting formal authority to such committees can impair communication and decision-making. Sub-groups are relatively understudied, but our results suggest that they play an important role in group functioning and corporate governance.
- DOI
- 10.1016/j.jfineco.2021.05.032
- Volume
- 141
- Issue
- 3
- Pages
- 1119-1146
- Language
- en
- Sources
- crossref openalex bibtex:phds-export.bib