Deadlock on the Board

60 Pages Posted: 20 Aug 2019 Last revised: 19 Jun 2023

See all articles by Jason Roderick Donaldson

Jason Roderick Donaldson

Washington University in St. Louis

Nadya Malenko

Boston College, Carroll School of Management; National Bureau of Economic Research (NBER); Finance Theory Group (FTG); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Giorgia Piacentino

Columbia University

Multiple version iconThere are 3 versions of this paper

Date Written: August 2019

Abstract

We develop a dynamic model of board decision-making. We show that a board could retain a policy all directors agree is worse than an available alternative. Thus, directors may retain a CEO they agree is bad—a deadlocked board leads to an entrenched CEO. We explore how to compose boards and appoint directors to mitigate deadlock. We find that board diversity and long director tenure can exacerbate deadlock. Moreover, we rationalize why CEOs and incumbent directors have power to appoint new directors: to avoid deadlock. Our model speaks to short-termism, staggered boards, and proxy access.

Suggested Citation

Donaldson, Jason Roderick and Malenko, Nadya and Piacentino, Giorgia, Deadlock on the Board (August 2019). NBER Working Paper No. w26155, Available at SSRN: https://ssrn.com/abstract=3439165

Jason Roderick Donaldson (Contact Author)

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Nadya Malenko

Boston College, Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Finance Theory Group (FTG) ( email )

United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Giorgia Piacentino

Columbia University ( email )

New York

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
23
Abstract Views
470
PlumX Metrics