Understanding the Board of Directors after the Financial Crisis

ECGI - Law Working Paper No. 229

Lex Research Topics in Corporate Law & Economics Working Paper No. 2013-5

32 Pages Posted: 7 Oct 2013 Last revised: 9 Oct 2015

See all articles by Joseph A. McCahery

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC); Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Erik P. M. Vermeulen

Tilburg University - Department of Business Law; Signify (formerly known as Philips Lighting) - Legal Department; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI); Kyushu University - Graduate School of Law

Date Written: October 6, 2013

Abstract

There are numerous studies on the effectiveness of boards that primarily focus on legal formalities, including gender diversity, board size, remuneration, board evaluation and the role of the chairman of the board. While attempting to design a one-size-fits-all framework, scholars approaching board independence from an agency cost perspective have been less concerned with analyzing board structures that contribute to strategic decision-making and corporate performance. We examine the factors and board strategies that are associated with value creation and innovation by analyzing the composition of high-performance and high-growth companies. The paper shows that venture capitalists, with their specific expertise and experience, continue to play an important role as independent board members in the post-IPO period. We specifically investigate the importance of diversity, showing that there are significant differences between the companies in terms of age, gender diversity and business expertise (which is dependent on the stage in the company life-cycle).

Keywords: Board of Directors, Board Insulation, Corporate Governance, Corporate Law, Gender Diversity, Innovation, Stock Market Performance, Value Creation, Venture Capital

JEL Classification: G34, K20, K22, L22, L25, L26, O16

Suggested Citation

McCahery, Joseph A. and Vermeulen, Erik P.M., Understanding the Board of Directors after the Financial Crisis (October 6, 2013). ECGI - Law Working Paper No. 229; Lex Research Topics in Corporate Law & Economics Working Paper No. 2013-5. Available at SSRN: https://ssrn.com/abstract=2336614 or http://dx.doi.org/10.2139/ssrn.2336614

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

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

HOME PAGE: http://www.ecgi.org

Erik P.M. Vermeulen (Contact Author)

Tilburg University - Department of Business Law ( email )

Signify (formerly known as Philips Lighting) - Legal Department ( email )

Amstelplein 2
Amsterdam
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI) ( email )

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

Kyushu University - Graduate School of Law ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan

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