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Board directors' preferences: What are good aggregation rules?

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  • Duran, Mihael

Abstract

I analyze how boards of directors with heterogeneous preferences can affect the information shared with the CEO with the help of a cheap-talk model that allows for large groups of receivers. This paper provides new insights on how heterogeneity of boards can change the way of communication between the board and the CEO, related to different ways of decision making. My model gives some insights how heterogeneous preferences can have an impact on how communication between CEO and the board of directors takes place. I also indicate how coalition forming in the boardroom can be influenced by director's and CEO's perferences. Finnaly this model gives a possible answer why board of directors hetreogeneity differs even for shareholder representatives if there are any empoyees on the board.

Suggested Citation

  • Duran, Mihael, 2013. "Board directors' preferences: What are good aggregation rules?," University of Tübingen Working Papers in Business and Economics 57, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    • Handle: RePEc:zbw:tuewef:57
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    References listed on IDEAS

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    Cited by:

    1. Chindasombatcharoen, Pongsapak & Chatjuthamard, Pattanaporn & Jiraporn, Pornsit & Treepongkaruna, Sirimon, 2023. "Director age and corporate innovation: Evidence from textual analysis," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    2. Duran, Mihael & Pull, Kerstin, 2014. "Der Beitrag der Arbeitnehmervertreter zur fachlichen und geschlechtlichen Diversitaet von Aufsichtsraeten: Erkenntnisse einer qualitativ-explorativen Analyse (Worker directors and supervisory board di," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 21(4), pages 329-351.

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    More about this item

    Keywords

    Board of directors; Cheap talk; Director's preferences; Heterogeneity; Multiple audiences;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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