A Theory of Friendly Boards

@article{Adams2003ATO,
  title={A Theory of Friendly Boards},
  author={R. B. Adams and Daniel Ferreira},
  journal={Journal of Finance},
  year={2003},
  volume={62},
  pages={217-250}
}
  • R. B. Adams, Daniel Ferreira, Daniel Ferreira
  • Published 2003
  • Economics, Business
  • Journal of Finance
  • We analyze the consequences of the board's dual role as advisor as well as monitor of management. Given this dual role, the CEO faces a trade-off in disclosing information to the board: If he reveals his information, he receives better advice; however, an informed board will also monitor him more intensively. Since an independent board is a tougher monitor, the CEO may be reluctant to share information with it. Thus, management-friendly boards can be optimal. Using the insights from the model… CONTINUE READING
    1,597 Citations

    Figures and Tables from this paper

    Director Independence as Strategic Behavior
    • Highly Influenced
    • PDF
    Advising and Monitoring CEOs: The Dual Role of Boards
    • 12
    • Highly Influenced
    • PDF
    Board Incentives and Board Independence in Dynamic Agency
    • 1
    • PDF
    Collusion in Board of Directors
    • 1
    • PDF
    Expertise, Structure, and Reputation of Corporate Boards
    • 18
    Costs and Benefits of 'Friendly' Boards during Mergers and Acquisitions
    • 137
    • Highly Influenced
    • PDF
    A Theory of Board Control and Size
    • 888
    • PDF
    An optimal board system : supervisory board vs. management board
    • 3
    • Highly Influenced
    • PDF

    References

    SHOWING 1-10 OF 55 REFERENCES
    Endogenously Chosen Boards of Directors and Their Monitoring of the CEO
    • 2,326
    • PDF
    Entrenchment and Severance Pay in Optimal Governance Structures
    • 369
    • PDF
    CEO Involvement in the Selection of New Board Members: An Empirical Analysis
    • 1,200
    • PDF
    The Value Maximizing Board
    • 115
    • PDF