This paper argues that the central function of the board of directors is, and has always been, to provide assurance, and reassurance. The paper introduces a typology of four classes of board functions, legal, normative, descriptive, and utilitarian, and argues that none adequately captures the...

The most influential approach of corporate governance, the view of shareholders' supremacy does not take into consideration that the key task of modern corporations is to generate and transfer firm-specific knowledge. It proposes that, in order to overcome the widespread corporate scandals, the...

Performance pay, at least as usually understood, is no good idea for non-executive directors. They have to supervise and control or in some situations even to fire and replace the executive managers. This means that their performance as supervisors is totally different from the performance of...

Despite considerable reforms over the past two decades, boards – particularly at financial institutions – have been criticized recently for poor stewardship. This article argues that the lack of attention to behavioral and functional considerations – in particular, relating to director...

This article argues that disparity in stature between the chief executive and other directors (for example, a 'star' CEO whose accomplishments and renown are much greater that the non-executive directors) can harm board performance and provides suggestions on how boards can maintain stature...

This paper studies the optimal structure of the board with an emphasis on the expertise of directors. The analysis provides three main results. First, the expertise of a value-maximizing board can harm shareholder value. Second, it is optimal to design a board whose members are biased against...

This study investigates a communication game between a CEO and a board of directors where the CEO's career concerns can potentially impede value-increasing informative communication. By adopting a policy of aggressive boards (excessive replacement), shareholders can facilitate communication...

We study how interest alignment between CEOs and corporate boards affects investment efficiency. The model entails a CEO who encounters an investment project and decides either or not to present it for approval to a board of directors. The CEO may need to collect and report investment-relevant...

A revised version of this paper, titled "Board bias, information, and investment efficiency," is available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3965147A CEO who is an empire-builder reports information about an investment opportunity ("project"). Before approving or...

The agency problem at the core of corporate law stems from a chronic potential conflict of interest between directors' self-interest and that of shareholders. Corporate law views directors' self-interest in terms of diverting welfare to directors at the expense of shareholders. Another component...