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Collusion in board of directors

Author

Listed:
  • Bourjade, Sylvain
  • Germain, Laurent
Abstract
The aim of this paper is to study what is the best structure of a Board of Directors when collusive aspects between the Board and the CEO are taken into account. We analyze how shareholders should select the members of the Board in a framework with asymmetric information and uncertainty about the optimal projects for the firm. In particular, we examine the optimal degree of independence of the Board from a shareholders perspective. This allows us to state when it is beneficial for shareholders to have an insider-oriented board or an outsider oriented board with a majority of independent directors when collusion is a major threat.

Suggested Citation

  • Bourjade, Sylvain & Germain, Laurent, 2011. "Collusion in board of directors," MPRA Paper 34814, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:34814
    as

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    File URL: https://mpra.ub.uni-muenchen.de/34814/1/MPRA_paper_34814.pdf
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    References listed on IDEAS

    as
    1. Vidhi Chhaochharia & Yaniv Grinstein, 2009. "CEO Compensation and Board Structure," Journal of Finance, American Finance Association, vol. 64(1), pages 231-261, February.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Collusion; Corporate Governance; Asymmetric Information; Uncertainty;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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