Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature

20 Pages Posted: 6 Sep 2005  

Benjamin E. Hermalin

University of California, Berkeley

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Abstract

The authors identify the primary findings of the empirical literature on boards of directors. Typically, these studies have sought to answer one of the following questions: How are the characteristics of the board related to profitability? How do these characteristics affect boards' observable actions? What factors affect board makeup and evolution? Across these studies, a number of regularities have emerged - notably, the fact that board composition does not seem to predict corporate performance, while board size has a negative relationship to performance. The authors note, however, that because there has been little theory to accompany these studies, it is difficult to interpret the empirical results, particularly with respect to possible policy prescriptions.

Keywords: Boards of Directors, economic literature, surveys

JEL Classification: G3, D2, L2

Suggested Citation

Hermalin, Benjamin E. and Weisbach, Michael S., Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature. Economic Policy Review, Vol. 9, No. 1, April 2003. Available at SSRN: https://ssrn.com/abstract=794804

Benjamin E. Hermalin (Contact Author)

University of California, Berkeley ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-7575 (Phone)
510-643-1420 (Fax)

Michael S. Weisbach

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Paper statistics

Downloads
2,507
Rank
3,268
Abstract Views
9,906