Deadlock on the Board

Jason Roderick Donaldson, Nadya Malenko and Giorgia Piacentino

No 26155, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a dynamic model of board decision-making. We show that a board could retain a policy all directors agree is worse than an available alternative. Thus, directors may retain a CEO they agree is bad—a deadlocked board leads to an entrenched CEO. We explore how to compose boards and appoint directors to mitigate deadlock. We find that board diversity and long director tenure can exacerbate deadlock. Moreover, we rationalize why CEOs and incumbent directors have power to appoint new directors: to avoid deadlock. Our model speaks to short-termism, staggered boards, and proxy access.

JEL-codes: G3 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-cfn and nep-mic
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Jason Roderick Donaldson & Nadya Malenko & Giorgia Piacentino & Itay Goldstein, 2020. "Deadlock on the Board," The Review of Financial Studies, vol 33(10), pages 4445-4488.

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Working Paper: Deadlock on the Board (2017)
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