Collusion in board of directors

Sylvain Bourjade and Laurent Germain

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to study what is the best structure of a Board of Directors when collusive aspects between the Board and the CEO are taken into account. We analyze how shareholders should select the members of the Board in a framework with asymmetric information and uncertainty about the optimal projects for the firm. In particular, we examine the optimal degree of independence of the Board from a shareholders perspective. This allows us to state when it is beneficial for shareholders to have an insider-oriented board or an outsider oriented board with a majority of independent directors when collusion is a major threat.

Keywords: Collusion; Corporate Governance; Asymmetric Information; Uncertainty (search for similar items in EconPapers)
JEL-codes: D81 D82 G34 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-bec, nep-cdm, nep-cta and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:34814

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