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Endogenously Chosen Boards of Directors and Their Monitoring of the CEO

Endogenously Chosen Boards of Directors and Their Monitoring of the CEO,Benjamin E. Hermalin,Michael S. Weisbach

Endogenously Chosen Boards of Directors and Their Monitoring of the CEO   (Citations: 369)
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This paper develops a model in which the effectiveness of the board's monitoring of the CEO depends on the board's structure or composition. The independence of new directors is determined through a bargaining process between the existing directors and the CEO. The CEO's bargaining position, and thus his influence over the board-selection process, depends on an updated estimate of the CEO's ability based on his prior performance. Many empirical findings about board structure and performance...
Published in 1995.
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