If outside directors with backgrounds in politics and in law play a political role, they will be more important on the boards of firms for which politics matters more. We conduct three tests. First, for a sample of manufacturing firms, we find that politically experienced directors are more...

A greater threat of takeover has two opposing effects on managerial compensation. The competition effect in the market for managers reduces compensation. The risk effect increases compensation by making managers' implicitly deferred compensation and firm-specific human capital less secure. Using...

A substantial number of outside directors have experience in non-business arenas, especially in government and in the private practice of law. Moreover, for most of these directors, the entirety of their experience is outside of business. We propose a political role for such directors and argue...

This paper examines the use of seven mechanisms to control agency problems between managers and shareholders. These mechanisms are: shareholdings of insiders, institutions, and large blockholders; use of outside directors; debt policy; the managerial labor market; and the market for corporate...

This paper examines firms' choice of the mix of mechanisms used to reduce agency problems between managers and shareholders. We empirically address two questions. First, is there interdependence between the use of the various quot;control mechanismsquot;? Second, does cross-sectional evidence...