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Affiliated Directors: Puppets of Management or Effective Directors?

New York University, Center for Law and Business, Working Paper No. 98-010

57 Pages Posted: 23 Sep 1998  

April Klein

New York University (NYU) - Department of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: January 1998

Abstract

This paper examines four non-mutually-exclusive hypotheses behind the inclusion of different types of directors and the impact they have on firm performance. Strong associations are found between the specific economic needs of companies and the incidence of directors most likely to fulfill these needs. In particular, theoretical and empirical evidence is presented that most affiliated directors are not puppets of management, but are placed on boards to serve specific, strategic needs of firms. In addition, no systematic relation is found between various measures of performance and director type. In total, it appears that, on average, boards of directors are constructed in a rational manner.

Suggested Citation

Klein, April, Affiliated Directors: Puppets of Management or Effective Directors? (January 1998). New York University, Center for Law and Business, Working Paper No. 98-010. Available at SSRN: https://ssrn.com/abstract=10569 or http://dx.doi.org/10.2139/ssrn.10569

April Klein (Contact Author)

New York University (NYU) - Department of Accounting ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012
United States

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