Board structures around the world: An experimental investigation

Ann B. Gillette, Thomas H. Noe and Michael J. Rebello

No 2008fe15, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We model and experimentally examine the board structure-performance relationship. We examine single-tiered boards, two-tiered boards, insider-controlled boards, and outsider-controlled boards. We find that even insider-controlled boards frequently adopt institutionally preferred rather than self-interested policies. Two-tiered boards adopt institutionally preferred policies more frequently but tend to destroy value by being too conservative, frequently rejecting good projects. Outsider-controlled single-tiered boards, both when they have multiple insiders and only a single insider, adopt institutionally preferred policies most frequently. In those board designs where the efficient Nash equilibrium produces strictly higher payoffs to all agents than the coalition-proof equilibria, agents tend to select the efficient Nash equilibria.

Date: 2008-01-01
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Citations: View citations in EconPapers (20)

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