The paper analyzes the optimal structure of the board of directors in a firm with ownership concentrated in the hands of a large shareholder who sits on the board. We focus our attention on the choice between a one-tier board that performs all tasks and a two-tier board where the management...

We study how interest alignment between CEOs and corporate boards influences investment efficiency and identify a novel force behind the benefit of misaligned preferences. Our model entails a CEO who encounters a project, gathers investment-relevant information, and decides whether or not to...

We find that co-opted boards facilitate more erratic and arbitrary decision-making, contributing towards default risk. A one standard deviation increase in co-option increases default risk by 11% relative to normal levels. Supporting the notion that co-option makes decision-making more erratic,...

In this paper I rectify the market governance model of Holmstrom and Tirole (1993) to develop and test a number of hypotheses concerning company board structure and incentives. Exogeneity stems from the forced departure of "non-independent" directors with substantial shareholdings from boards...