The Role of Boards of Directors in Corporate Governance: A Conceptual Framework & Survey

Adams, Renee B.; Hermalin, Benjamin E.; Weisbach, Michael S.

doi:10.2139/ssrn.1299212

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The Role of Boards of Directors in Corporate Governance: A Conceptual Framework & Survey

Charles A. Dice Center Working Paper No. 2008-21

European Corporate Governance Institute (ECGI) - Finance Working Paper No. 228/2009

Fisher College of Business Working Paper No. 2008-03-020

69 Pages Posted: 18 Nov 2008 Last revised: 31 Oct 2018

See all articles by Renee B. Adams

Renee B. Adams

University of Oxford; European Corporate Governance Institute (ECGI)

Benjamin E. Hermalin

University of California, Berkeley; European Corporate Governance Institute (ECGI)

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Date Written: April 10, 2009

Abstract

This paper is a survey of the literature on boards of directors, with an emphasis on research done subsequent to the Hermalin and Weisbach (2003) survey. The two questions most asked about boards are what determines their makeup and what determines their actions? These questions are fundamentally intertwined, which complicates the study of boards because makeup and actions are jointly endogenous. A focus of this survey is how the literature, theoretical as well as empirically, deals - or on occasions fails to deal - with this complication. We suggest that many studies of boards can best be interpreted as joint statements about both the director-selection process and the effect of board composition on board actions and firm performance.

Keywords: endogenous governance, board of director selection and actions

JEL Classification: G34, L20

Suggested Citation: Suggested Citation

Adams, Renée B. and Hermalin, Benjamin E. and Weisbach, Michael S., The Role of Boards of Directors in Corporate Governance: A Conceptual Framework & Survey (April 10, 2009). Charles A. Dice Center Working Paper No. 2008-21, European Corporate Governance Institute (ECGI) - Finance Working Paper No. 228/2009, Fisher College of Business Working Paper No. 2008-03-020, Available at SSRN: https://ssrn.com/abstract=1299212 or http://dx.doi.org/10.2139/ssrn.1299212