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Freedom of Choice between Unitary and Two-Tier Boards: An Empirical Analysis

Belot, François; Ginglinger, Edith; Slovin, Myron; Sushka, Marie (2014), Freedom of Choice between Unitary and Two-Tier Boards: An Empirical Analysis, Journal of Financial Economics, 112, 3, p. 364–385. http://dx.doi.org/10.1016/j.jfineco.2014.02.011

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Type
Article accepté pour publication ou publié
Date
2014
Journal name
Journal of Financial Economics
Volume
112
Number
3
Publisher
Elsevier
Pages
364–385
Publication identifier
Metadata
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Author(s)
Belot, François

Ginglinger, Edith

Slovin, Myron

Sushka, Marie
Abstract (EN)
We examine board structure in France, which since 1966 has allowed firms 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. There is enhanced sensitivity of CEO turnover 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 there are gains from allowing freedom of contract about board structure.
Subjects / Keywords
Unitary board; Corporate governance; Two-tier board; Board of directors; Monitoring
JEL
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
G34 - Mergers; Acquisitions; Restructuring; Corporate Governance