Post by Sapphire Capital on Aug 20, 2008 10:45:31 GMT 4
Board Structures Around the World: An Experimental Investigation
Thomas H. Noe
Oxford (SBS and Balliol)
Michael J. Rebello
University of Texas at Dallas - School of Management
Review of Finance, Vol. 12, No. 1, pp. 93-140, 2008
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.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1159625
Thomas H. Noe
Oxford (SBS and Balliol)
Michael J. Rebello
University of Texas at Dallas - School of Management
Review of Finance, Vol. 12, No. 1, pp. 93-140, 2008
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.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1159625