In this paper, we first shed light on the factors that underlie the differences between the ‘shareholder wealth maximization' and the ‘long-term commitment' models of corporate governance. By introducing a third type of governance model, we show that a three-dimensional approach provides a...

This article evaluates the Takeover Bids Directive's board neutrality rule, in light of the European Commission's option to propose the revision of the Directive and a recent suggestion put forward by some commentators to make the rule, which is optional, harder to opt-out. It does so by...

We analyze a simple model of board voting and find that in comparison to boards with an even number of directors (even boards), those with an odd number of directors (odd boards) improve voting efficiency by better aggregating directors' information. Consistent with the model's implications, our...

This paper analyzes the characteristics of firms that declare board directors as independents, although the directors are not strictly independent, and examines the consequences in terms of performance and corporate governance outcomes. Based on publicly available information, eight criteria of...

While the fraction of independent directors has been widely used as a proxy for monitoring effectiveness of the board, there are no clear-cut measures that capture the advising effectiveness of the board. We develop and validate two new measures of board advising: (i) per-outside-director...

This paper investigates how institutional environment like property rights protection influences the size and composition of corporate boards, and further, how board structure impacts firm performance in China. Using a World Bank survey of 2,400 public and private firms across 18 Chinese cities,...

Regulators, proxy advisors and shareholders are regularly calling for independent directors. However, at the same time, independent directors commonly engage in numerous outside activities potentially reducing their time and commitment with the particular firm. Using Tobin's Q as an...

This paper extends the literature on corporate governance by analyzing the voluntary use of special committees during corporate takeovers. These committees are comprised of disinterested target firm directors and serve as an additional mechanism to enhance the oversight of potential conflicts....

We argue that not all independent directors are equally effective in monitoring top management. Specifically, directors who are appointed by the CEO are likely to have stronger allegiance to the CEO and will be weaker monitors. To examine this hypothesis, we propose and empirically deploy two...

The corporate governance crisis at the start of this third Millennium and the financial crisis only a few years later, have cast doubts on the way boards of directors of companies function. Lawyers and (financial) economists have developed narrow perceptions of boards and their roles that are...