IDEAS home Printed from
   My bibliography  Save this article

Delegated Monitoring: When Can Boards Rely on Outside Experts?


  • Nina Walton


This paper provides a theoretical model to examine when and how boards of directors can utilize outside experts who provide second opinions to assist them in 1) monitoring managers with career concerns and 2) approving firm investments. Because an agreeable second opinion serves as a signaling mechanism, when such opinions are credible, policies mandating the use of experts are unnecessary as managers will choose to seek out second opinions on their own. Mandates can be counterproductive, however, if they unduly elevate the status of costly second opinions that always agree with management recommendations. In the absence of incentives for truthful disclosure of information to experts, it is better for boards to forego efforts to and require management and experts to present their recommendations as one. Copyright 2012, Oxford University Press.

Suggested Citation

  • Nina Walton, 2012. "Delegated Monitoring: When Can Boards Rely on Outside Experts?," American Law and Economics Review, Oxford University Press, vol. 14(1), pages 271-301.
  • Handle: RePEc:oup:amlawe:v:14:y:2012:i:1:p:271-301

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:amlawe:v:14:y:2012:i:1:p:271-301. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.