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Regulation and the Evolution of Corporate Boards: Monitoring, Advising or Window Dressing?


  • Eric Helland

    (Claremont McKenna College)

  • Michael Sykuta

    (University of Missouri - Columbia)


It is generally agreed that boards are endogenously determined institutions that serve both an oversight and advisory role in a firm. While oversight role of boards has been extensively studied relatively few studies have examined the advisory role of corporate boards. In this study we examine the participation of "political" directors on the boards of natural gas companies between 1930 and 1998. We focus on the 1938, and 1954 regulation and 1986 partial deregulation of the natural gas industry. Using datasets covering the period from 1930 to 1990 and 1978 to 1998, we test whether regulation and deregula tion altered the composition of companies’ boards as the firms’ environment changed. In particular, did regulation cause an increase and deregulation a decrease, in the number of "political" directors on corporate boards? We find evidence that the number of "political" directors increases as firms shift from market to political competition. Specifically the regulation of natural gas is associated with an increase in the number of "political" directors and the deregulation is associated with a decrease in the number of "political" directors on boards.

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  • Eric Helland & Michael Sykuta, 2002. "Regulation and the Evolution of Corporate Boards: Monitoring, Advising or Window Dressing?," Claremont Colleges Working Papers 2002-27, Claremont Colleges.
  • Handle: RePEc:clm:clmeco:2002-27

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    Cited by:

    1. Volonté, Christophe, 2015. "Boards: Independent and committed directors?," International Review of Law and Economics, Elsevier, vol. 41(C), pages 25-37.
    2. Mari Sako & Katsuyuki Kubo, 2018. "Professionals On Corporate Boards In Japan: How Do They Affect The Bottom Line?," Working Papers halshs-01770191, HAL.
    3. Cicero, David & Wintoki, M. Babajide & Yang, Tina, 2013. "How do public companies adjust their board structures?," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 108-127.
    4. repec:pal:jbkreg:v:19:y:2018:i:3:d:10.1057_s41261-017-0045-0 is not listed on IDEAS
    5. Hahn, Peter D. & Lasfer, Meziane, 2016. "Impact of foreign directors on board meeting frequency," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 295-308.
    6. Corinne Post & Noushi Rahman & Cathleen McQuillen, 2015. "From Board Composition to Corporate Environmental Performance Through Sustainability-Themed Alliances," Journal of Business Ethics, Springer, vol. 130(2), pages 423-435, August.
    7. Avdasheva, S., 2013. "Impact of Regulatory Constraints on Corporate Governance in the Contemporary Russian SOE," Journal of the New Economic Association, New Economic Association, vol. 20(4), pages 159-164.
    8. Michael E. Sykuta, 2010. "Empirical Methods in Transaction Cost Economics," Chapters,in: The Elgar Companion to Transaction Cost Economics, chapter 16 Edward Elgar Publishing.
    9. Chahine, Salim & Goergen, Marc, 2013. "The effects of management-board ties on IPO performance," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 153-179.
    10. Yeh, Yin-Hua & Shu, Pei-Gi & Chiang, Tsui-Lin, 2014. "Affiliation and professionalism: Alternative perspectives on decomposing the board structures of financial institutions," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 159-174.
    11. Andres, Pablo de & Vallelado, Eleuterio, 2008. "Corporate governance in banking: The role of the board of directors," Journal of Banking & Finance, Elsevier, vol. 32(12), pages 2570-2580, December.
    12. Lerong He & Rong Yang, 2014. "Does Industry Regulation Matter? New Evidence on Audit Committees and Earnings Management," Journal of Business Ethics, Springer, vol. 123(4), pages 573-589, September.

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