Deadlock on the Board

• 成果类型: Article
• 署名作者: Donaldson, Jason Roderick; Malenko, Nadya; Piacentino, Giorgia
• 署名单位: Washington University (WUSTL); Center for Economic & Policy Research (CEPR); Boston College; European Corporate Governance Institute; Columbia University; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa006
• 发表日期: 2020
• 页码: 4445
• 关键词: STAGGERED BOARDS; ceo; diversity; DIRECTORS; INDEPENDENCE; entrenchment; SHAREHOLDERS; MARKET

摘要

We develop a dynamic model of board decision-making akin to dynamic voting models in the political economy literature. We show a board could retain a policy all directors agree is worse than an available alternative. Thus, directors may retain a CEO they agree is bad-deadlocked boards lead to entrenched CEOs. We explore how to compose boards and appoint directors to mitigate deadlock. We find board diversity and long director tenure can exacerbate deadlock. We rationalize why CEOs and incumbent directors have power to appoint new directors: to avoid deadlock. Our model speaks to short-termism, staggered boards, and proxy access.