A model of the dynamic of subgroup influence on boards

Julia Morley and J. Mckenzie Alexander

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Corporate governance regulation on board effectiveness tends to focus on board composition and pays less attention to the issue of the dynamics of board deliberation. We develop an agent-based model to provide a `how possible' explanation which engages primarily with these dynamics and demonstrates how a small subgroup on a board can dominate deliberation in virtue of rhetorical characteristics. In particular it is shown that a subgroup of 5 out of 14 board members can exert disproportionate influence over board decision-making. The assumptions of the model are validated by empirical evidence from interviews and a conversation analysis of two board meetings of the International Accounting Standards Board. The findings contribute to current research on board effectiveness by introducing an agent-based model and by providing directly observed evidence of the dynamics of board deliberation.

JEL-codes: J50 (search for similar items in EconPapers)
Date: 2022-08-01
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Published in Academy of Management Proceedings, 1, August, 2022, 22(1). ISSN: 2151-6561

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