Death by Committee? An Analysis of Corporate Board (Sub-) Committees

76 Pages Posted: 22 Feb 2016 Last revised: 20 May 2020

See all articles by Renee B. Adams

Renee B. Adams

University of Oxford; ABFER

Vanitha Ragunathan

University of Queensland - Business School; Financial Research Network (FIRN)

Robert Tumarkin

UNSW Australia Business School, School of Banking and Finance; Financial Research Network (FIRN)

Date Written: May 1, 2020

Abstract

Theoretical models of groups suggest that sub-group usage can affect communication among members and group decision-making. To examine the trade-offs from forming sub-groups, we assemble a detailed dataset on corporate boards (groups) and committees (sub-groups). Boards have increasingly used committees formally staffed entirely by outside directors. Twenty-five percent of all director meetings occurred in such committees in 1996; this increased to forty-five percent by 2010. We find evidence that granting formal authority to such committees can impair communication and decision-making. Sub-groups are relatively understudied, but our results suggest that they play an important role in group functioning and corporate governance.

Keywords: Board of Directors; Committee; Decision-Making; Sarbanes-Oxley

JEL Classification: G30; G34; G38

Suggested Citation

Adams, Renée B. and Ragunathan, Vanitha and Tumarkin, Robert, Death by Committee? An Analysis of Corporate Board (Sub-) Committees (May 1, 2020). Available at SSRN: https://ssrn.com/abstract=2736027 or http://dx.doi.org/10.2139/ssrn.2736027

Renée B. Adams (Contact Author)

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

ABFER

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Vanitha Ragunathan

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia
(07) 3365 8204 (Phone)
(07) 3365 6988 (Fax)

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Robert Tumarkin

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia
+61 02 9385 6730 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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