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A minimum theory of boards

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  • Steen Thomsen

Abstract

I propose a 'minimum theory' of company boards. Compared with other actors like managers, large owners and auditors, boards have a comparative advantage in classical board functions such as monitoring, management replacement, control and ratification of major decisions. While the expertise accumulated by doing these jobs may also be useful in business strategy, risk management, shareholder and stakeholder relations, I argue that the marginal value of additional board work declines steeply and becomes negative if boards are overloaded with responsibility. Because of the empowerment of boards, the risk of overload appears to have increased in recent years.

Suggested Citation

  • Steen Thomsen, 2008. "A minimum theory of boards," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 1(1), pages 73-96.
    • Handle: RePEc:ids:ijcgov:v:1:y:2008:i:1:p:73-96
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    Cited by:

    1. Jesus Sáenz González & Emma García-Meca, 2014. "Does Corporate Governance Influence Earnings Management in Latin American Markets?," Journal of Business Ethics, Springer, vol. 121(3), pages 419-440, May.

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