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

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

See all articles by Renee B. Adams

Renee B. Adams

University of Oxford; ABFER

Benjamin E. Hermalin

University of California, Berkeley

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

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

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

Renée B. Adams

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

ABFER

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1 Business Link
Singapore, 117592
Singapore

Benjamin E. Hermalin

University of California, Berkeley ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-7575 (Phone)
510-643-1420 (Fax)

Michael S. Weisbach (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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