The Governance of Firms Controlled by More than One Board: Theory Development and Examples

A Thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosphy, Macquarie Graduate School of Management, Macquarie University, Sydney, Australia, August 2000

334 Pages Posted: 1 Dec 2005

See all articles by Shann Turnbull

Shann Turnbull

International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance

Date Written: August 2000


The contribution of this thesis is to present a framework to analyse firms controlled by more than one board. The literature survey of Chapter 2 revealed that there is little recognition of this phenomenon and no accepted way to investigate firms governed by multiple control centres described as a "compound board". The framework is developed in Chapter 3. The historical emergence of compound boards is outlined in Chapter 4 with examples of their architecture described in Chapters 5 and 6. Chapter 7 shows how the framework provides insights not available from other theories of the firm and how selfyes governance can be furthered by utilising contrary human attributes of competition/co-operation, trust/suspicion and self-interest/altruism.

The framework is described as transaction byte analysis (TBA) as it is based on the limited and inconsistent ability of humans to transact units of information described as "bytes". TBA identifies cybernetic principles and strategies that can mitigate human limitations in processing bytes. These provide organisational design criteria for firms to obtain operating advantages. As information is a common element in varies theories of the firm, TBA relates and subsumes them while allowing any type of organisation to be analysed.

Propositions are presented in Chapter 7 for illustrating how TBA provides insights into explaining: (i) why non-trivial employee owned industrial firms have more than one board; (ii) why self-regulation and self-governance of non-trivial firms cannot be assured without a compound board; (iii) how compound boards can simplify the role, knowledge, duties and liabilities of directors; (iv) the competitive advantages of appropriate compound boards in relation to unitary control systems; (v) how to compare and evaluate the relative advantages and disadvantages of firms with different ownership and control structures; (vi) how to compare the relative efficacy of hierarchical and non-hierarchical firms be they in the private or public sector.

Keywords: Contrary behaviour, Corporate Governance, Evaluating Governance, Governance Architecture, Multiple boards, Organisational design, Self-governance, Stakeholder, Tensegrity, Theories of firms, Theory of organisations, Transaction Byte Analysis, Transaction Cost Economics

JEL Classification: B41, D70, D83, D85, L29

Suggested Citation

Turnbull, Shann, The Governance of Firms Controlled by More than One Board: Theory Development and Examples (August 2000). Available at SSRN: or

Shann Turnbull (Contact Author)

International Institute for Self-Governance ( email )

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Sustainable Money Working Group ( email )

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