Asking Directors About Their Dual Roles
Preprint
- 31 March 2009
- preprint
- Published by Elsevier BV in SSRN Electronic Journal
Abstract
This paper uses a large survey of directors to investigate variation in directors' dual roles as advisors and monitors of management. I examine whether the advisory role encourages information exchange between the CEO and the board, as suggested by Adams and Ferreira (2007). I also examine factors related to directors' perceptions of their roles. Amongst others the data suggests that a) directors vary in their perceptions of their roles and directors' roles affect their perceptions of information exchange, b) directors who agree more that they primarily monitor management perceive that they participate less in boardroom discussion than directors who agree that the CEO often asks them for advice, c) directors with a stronger personal relationship with management perceive their advisory role to be more important, and d) directors on boards with more decision-making power perceive their monitoring role to be less important relative to their advisory role. The results are robust to using Heckman selection techniques to address nonresponse bias. Overall, the data suggests that monitoring alone may not be sufficient for good governance.This publication has 26 references indexed in Scilit:
- Corporate Governance, Debt, and Investment Policy during the Great DepressionPublished by National Bureau of Economic Research ,2011
- Board structure and price informativenessJournal of Financial Economics, 2011
- When are outside directors effective?Journal of Financial Economics, 2010
- The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and SurveyPublished by National Bureau of Economic Research ,2008
- Boards: Does one size fit all?Journal of Financial Economics, 2008
- Measuring and Explaining Management Practices Across Firms and CountriesThe Quarterly Journal of Economics, 2007
- The determinants of corporate board size and composition: An empirical analysisJournal of Financial Economics, 2007
- A Theory of Friendly BoardsThe Journal of Finance, 2007
- Too Busy to Mind the Business? Monitoring by Directors with Multiple Board AppointmentsThe Journal of Finance, 2003
- The theory and practice of corporate finance: evidence from the fieldJournal of Financial Economics, 2001