Articles

Freedom of choice between unitary and two-tier boards: An empirical analysis

M. B. SLOVIN, M. BELOT, E. GINGLINGER, M. E. SUSHKA

Journal of Financial Economics

juin 2014, vol. 112, n°3, pp.364-385

Départements : Finance

Mots clés : Board of directors; Two-tier board; Unitary board; Corporate governance; Monitoring

http://www.sciencedirect.com/science/article/pii/S0304405X14000427


We examine board structure in France, which since 1966 has allowed firms the freedom to choose between unitary and two-tier boards. We analyze how this choice relates to characteristics of the firm and its environment. Firms with severe asymmetric information tend to opt for unitary boards; firms with a potential for private benefits extraction tend to adopt two-tier boards. Chief executive officer turnover is more sensitive to performance at firms with two-tier boards, indicating greater monitoring. Our results are broadly consistent with the Adams and Ferreira (2007) model and suggest that gains result from allowing freedom of contract about board structure


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