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Herding Behaviour Inside the Board: an experimental approach

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  • Maximiliano González
  • Renato Modernell
  • Elisa París

Abstract

An experimental study was conducted to measure the impact of “herding behaviour” inside a board of directors based on the González (2002 PhD dissertation) theoretical model, which maintains that in a board meeting composed of a CEO and two external directors (A and B), where voting is sequential (CEO → A → B) and the directors’ reputations are valuable, director B tends to copy director A’s decision. Based on the observations made through the experiment, we confirm the presence of herding behaviour.

Suggested Citation

  • Maximiliano González & Renato Modernell & Elisa París, 2006. "Herding Behaviour Inside the Board: an experimental approach," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(5), pages 388-405, September.
    • Handle: RePEc:bla:corgov:v:14:y:2006:i:5:p:388-405
    DOI: 10.1111/j.1467-8683.2006.00513.x
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    References listed on IDEAS

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    1. Alan S. Blinder & John Morgan, 2000. "Are Two Heads Better than One?: An Experimental Analysis of Group vs. Individual Decisionmaking," Working Papers 2000-1, Princeton University. Economics Department..
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    Cited by:

    1. Milene B Alves & Ricardo P C Leal, 2016. "Board characteristics and compensation in Brazilian listed companies," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 13(4), pages 309-328, November.
    2. Gavin Nicholson & Abdallah Bader Mahmoud Al-Zoubi, 2024. "The effect of decision recommendations and approval expectations on directors’ decision control: an experimental investigation of anchoring effects," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 35(3), pages 437-465, September.
    3. Robert Grosse, 2012. "Bank regulation, governance and the crisis: a behavioral finance view," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 20(1), pages 4-25, February.
    4. Efrat Dressler & Yevgeny Mugerman, 2023. "Doing the Right Thing? The Voting Power Effect and Institutional Shareholder Voting," Journal of Business Ethics, Springer, vol. 183(4), pages 1089-1112, April.
    5. Xile Yin & Siyu Chen & Dahui Li & Feng Zhang, 2021. "Social norms for fairness and board voting behavior: An experimental investigation," Corporate Governance: An International Review, Wiley Blackwell, vol. 29(2), pages 110-133, March.

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