Freedom of choice between unitary and two-tier boards: An empirical analysis |
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Authors: | François Belot Edith Ginglinger Myron B Slovin Marie E Sushka |
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Institution: | 1. Université de Cergy-Pontoise, THEMA, France;2. Université Paris-Dauphine, DRM, France;3. HEC Paris, France;4. Arizona State University, USA |
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Abstract: | 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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Keywords: | G32 G34 |
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