Death by committee? An analysis of corporate board (sub-) committees

Renee Adams, Vanitha Ragunathan and Robert Tumarkin

Journal of Financial Economics, 2021, vol. 141, issue 3, 1119-1146

Abstract: Theoretical models of groups suggest that sub-group usage can affect communication among members and group decision-making. To examine the trade-offs from forming sub-groups, we assemble a detailed dataset on corporate boards (groups) and committees (sub-groups). Boards have increasingly used committees formally staffed entirely by outside directors. Our data show that twenty-five percent of all director meetings occurred in such committees in 1996; this increased to 45% by 2010. Our evidence suggests that granting formal authority to such committees can impair communication and decision-making. Sub-groups are relatively understudied, but our results suggest that they play an important role in group functioning and corporate governance.

Keywords: Board of directors; Committee; Decision-making; Sarbanes–Oxley (search for similar items in EconPapers)
JEL-codes: G30 G34 G38 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:141:y:2021:i:3:p:1119-1146

DOI: 10.1016/j.jfineco.2021.05.032

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