Board structures around the world: An experimental investigation
AbstractWe model and experimentally examine the board structure-performance relationship. We examine single-tiered boards, two-tiered boards, insider-controlled boards, and outsider-controlled boards. We find that even insider-controlled boards frequently adopt institutionally preferred rather than self-interested policies. Two-tiered boards adopt institutionally preferred policies more frequently, but tend to destroy value by being too conservative, frequently rejecting good projects. Outsidercontrolled single-tiered boards, both when they have multiple insiders and only a single insider, adopt institutionally preferred policies most frequently. In those board designs where the efficient Nash equilibrium produces strictly higher payoffs to all agents than the coalition-proof equilibria, agents tend to select the efficient Nash equilibria.
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Bibliographic InfoPaper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2007-04.
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- Ann B. Gillette & Thomas H. Noe & Michael J. Rebello, 2008. "Board Structures Around the World: an Experimental Investigation," Review of Finance, European Finance Association, vol. 12(1), pages 93-140.
- Ann B. Gillette & Thomas H. Noe & Michael J. Rebello, 2008. "Board structures around the world: An experimental investigation," OFRC Working Papers Series 2008fe15, Oxford Financial Research Centre.
- NEP-ALL-2007-06-23 (All new papers)
- NEP-CBE-2007-06-23 (Cognitive & Behavioural Economics)
- NEP-PPM-2007-06-23 (Project, Program & Portfolio Management)
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