Lehman Brothers: Peeking Under the Board Facade

Abstract

Governance experts place considerable emphasis on structural attributes of the board. Many boards are now indistinguishable in terms of regulatory independence, size, and personal and professional composition. And yet, two companies can look quite similar in terms of board structure and have very different board quality.

Has an emphasis on best practices for board structure led to a decrease in board quality? We explore this question by comparing the board of Lehman Brothers to Goldman Sachs.

Topics, Issues and Controversies in Corporate Governance and Leadership: The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the book Corporate Governance Matters, and A Real Look at Real World Corporate Governance.

Keywords: board of directors, board structure, corporate governance, regulatory oversight

JEL Classification: G30, G34