Review of Finance Vol. 12 No. 1 2008
Board Structures Around the World: an Experimental Investigation
Abstract
We model and experimentally examine the board structure–performance relationship. We examine single-tiered boards, two-tiered boards, insider-controlled boards, and outsider-controlled boards. We find that even insider-controlled boards frequently adopt institutionally preferred rather than self-interested policies. Two-tiered boards adopt institutionally preferred policies more frequently but tend to destroy value by being too conservative, frequently rejecting good projects. Outsider-controlled single-tiered boards, both when they have multiple insiders and only a single insider, adopt institutionally preferred policies most frequently. In those board designs where the efficient Nash equilibrium produces strictly higher payoffs to all agents than the coalition-proof equilibria, agents tend to select the efficient Nash equilibria.
- DOI
- 10.1093/rof/rfm027
- Volume
- 12
- Issue
- 1
- Pages
- 93-140
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref