Freedom of choice between unitary and two-tier boards: An empirical analysis

François Belot, Edith Ginglinger, Myron B. Slovin and Marie E. Sushka

Journal of Financial Economics, 2014, vol. 112, issue 3, 364-385

Abstract: We examine board structure in France, which since 1966 has allowed firms the freedom to choose between unitary and two-tier boards. We analyze how this choice relates to characteristics of the firm and its environment. Firms with severe asymmetric information tend to opt for unitary boards; firms with a potential for private benefits extraction tend to adopt two-tier boards. Chief executive officer turnover is more sensitive to performance at firms with two-tier boards, indicating greater monitoring. Our results are broadly consistent with the Adams and Ferreira (2007) model and suggest that gains result from allowing freedom of contract about board structure.

Keywords: Board of directors; Two-tier board; Unitary board; Corporate governance; Monitoring (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

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Working Paper: Freedom of choice between unitary and two-tier boards: an empirical analysis (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:112:y:2014:i:3:p:364-385

DOI: 10.1016/j.jfineco.2014.02.011

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