Abstract

https://ssrn.com/abstract=2389374
 


 



Freedom of Choice between Unitary and Two-Tier Boards: An Empirical Analysis


Francois Belot


Université de Cergy-Pontoise

Edith Ginglinger


Université Paris-Dauphine, DRM

Myron B. Slovin


HEC Paris

Marie E. Sushka


Arizona State University

October 1, 2013

Journal of Financial Economics (JFE), Forthcoming

Abstract:     
We examine board structure in France, which since 1966 has allowed firms freedom to choose between unitary and two-tier boards. We analyze how this choice relates to characteristics of the firm and its environment. Firms with severe asymmetric information tend to opt for unitary boards; firms with a potential for private benefits extraction tend to adopt two-tier boards. There is enhanced sensitivity of CEO turnover to performance at firms with two-tier boards, indicating greater monitoring. Our results are broadly consistent with the Adams and Ferreira (2007) model and suggest there are gains from allowing freedom of contract about board structure.

Number of Pages in PDF File: 58

Keywords: Board of directors, two-tier board, unitary board, corporate governance, monitoring

JEL Classification: G32; G34


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Date posted: February 3, 2014  

Suggested Citation

Belot, Francois and Ginglinger, Edith and Slovin, Myron B. and Sushka, Marie E., Freedom of Choice between Unitary and Two-Tier Boards: An Empirical Analysis (October 1, 2013). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2389374

Contact Information

Francois Belot
Université de Cergy-Pontoise ( email )
THEMA
33 boulevard du Port
Cergy-Pontoise Cedex, 95011
France
+33 1 34 25 62 33 (Fax)
Edith Ginglinger (Contact Author)
Université Paris-Dauphine, DRM ( email )
Place du Marechal de Lattre Tassigny
Paris, 75775
France

Myron B. Slovin
HEC Paris
1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

Marie E. Sushka
Arizona State University ( email )
W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States
602-965-3131 (Phone)
602-965-8539 (Fax)
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