A minimum theory of boards

Steen Thomsen

International Journal of Corporate Governance, 2008, vol. 1, issue 1, 73-96

Abstract: I propose a 'minimum theory' of company boards. Compared with other actors like managers, large owners and auditors, boards have a comparative advantage in classical board functions such as monitoring, management replacement, control and ratification of major decisions. While the expertise accumulated by doing these jobs may also be useful in business strategy, risk management, shareholder and stakeholder relations, I argue that the marginal value of additional board work declines steeply and becomes negative if boards are overloaded with responsibility. Because of the empowerment of boards, the risk of overload appears to have increased in recent years.

Keywords: company boards; company performance; corporate governance; board empowerment; board overload. (search for similar items in EconPapers)
Date: 2008
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