Corporate board composition, protocols, and voting behavior: Experimental evidence
AB Gillette, TH Noe, MJ Rebello - The Journal of Finance, 2003 - Wiley Online Library
We examine voting by a board designed to mitigate conflicts of interest between privately
informed insiders and owners. Our model demonstrates that, as argued by researchers and
the business press, boards with a majority of trustworthy but uninformed “watchdogs” can
implement institutionally preferred policies. Our laboratory experiments strongly support this
conclusion. Our model also highlights the necessity of penalties on insiders when there is
dissension among board members. However, penalties for dissent appeared to have little …
informed insiders and owners. Our model demonstrates that, as argued by researchers and
the business press, boards with a majority of trustworthy but uninformed “watchdogs” can
implement institutionally preferred policies. Our laboratory experiments strongly support this
conclusion. Our model also highlights the necessity of penalties on insiders when there is
dissension among board members. However, penalties for dissent appeared to have little …
Corporate Board Composition, Protocols, and Voting Behavior: Experimental Evidence, Working Paper 2000-10
AB Gillette, TH Noe, MJ Rebello - 2000 - fraser.stlouisfed.org
We model experimentally the governance of an institution. The optimal management of this
institution depends on the information possessed by insiders. However, insiders, whose
interests are not aligned with the interests of the institution, may choose to use their
information to further personal rather than institutional ends. Researchers (eg, Palfrey 1990)
and the business press have both argued that multiagent mechanisms, which inject
trustworthy but uninformed" watchdog" agents into the governance process and impose …
institution depends on the information possessed by insiders. However, insiders, whose
interests are not aligned with the interests of the institution, may choose to use their
information to further personal rather than institutional ends. Researchers (eg, Palfrey 1990)
and the business press have both argued that multiagent mechanisms, which inject
trustworthy but uninformed" watchdog" agents into the governance process and impose …