Monitoring to Reduce Agency Costs: Examining the Behavior of Independent and Non-Independent Boards
AbstractBerle and Means's analysis of the corporation--in particular, their view that those in control are not the owners of the corporation--raises questions about actions that corporations take to counter concerns regarding management's influence. What mechanisms, if any, do corporations implement to balance the distribution of power in the corporation? To address this question, we analyze boards of directors' propensity to voluntarily adopt recommended corporate governance practices. Because board independence is one way to enhance shareholders' ability to monitor management, we probe whether firms with independent boards of directors (which we define as boards with either an independent chair or a majority of independent directors) are more likely than firms without independent boards to adopt these practices. We focus on boards' willingness to monitor their firms' agents, examining the relationship between board independence and the voluntary adoption of corporate governance guidelines.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1243.
Length: 40 pages
Date of creation: Oct 2010
Date of revision:
Corporate Governance; Agency Costs; Monitoring; Independent Boards;
Find related papers by JEL classification:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-23 (All new papers)
- NEP-BEC-2010-10-23 (Business Economics)
- NEP-CTA-2010-10-23 (Contract Theory & Applications)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Babcock).
If references are entirely missing, you can add them using this form.