Structural Holes, CEOs, and the Missing Link in Corporate Governance

Abstract:     
Recent studies have questioned the desirability of independent boards. This paper presents and examines two principal hypotheses and four subsidiary hypotheses to explain these results. The two principal hypotheses are:

1. Corporations that have inside boards will have weak CEOs.

2. Corporations that have independent boards will have strong CEOs.

The four subsidiary hypotheses are:

1. Corporations that are hierarchically structured and have inside boards will have weak CEOs.

2. Corporations that are hierarchically structured and have independent boards will have moderately weak CEOs.

3. Corporations that are horizontally structured and have inside boards will have moderately strong CEOs.

4. Corporations that are horizontally structured and have independent boards will have strong CEOs.

The hypotheses are examined through the lens of structural hole theory and recommendations for reform and further research are provided.

Number of Pages in PDF File: 81

Keywords: corporate governance, independent directors, board of directors, structural holes

JEL Classification: G3, K0, K1, K2

working papers series