Four essays in corporate governance

This thesis consists of four papers in corporate governance. The first paper examines the implications of a board's dual role as both an advisor as well as a monitor of management. As a result of this dual role the manager in a sole board system faces a tradeoff concerning the amount of information he discloses to the board. The model shows that the board would like to pre-commit to reduce its monitoring of the manager in order to encourage the manager to share his information. When the two roles of the board are separated, the manager does not face the same tradeoff in the provision of information. Therefore, the model shows that in certain situations it is better to separate the board's roles as advisor and monitor. This has implications for the choice of a dual over a sole board system and thus for cross-country variation in governance.; The second paper asks whether board structure is organizationally efficient. I test whether the executive committee substitutes for the full board when the full board cannot act effectively. I use a panel of 37 bank holding companies during 1986–1999 to examine the determinants of a firm's choice to have an executive committee. Executive committee presence is positively associated with the proportion of outsiders on the board. If the executive committee is not inclusive enough then its presence has a negative effect on firm value. Even so, an inclusive executive committee can perform a valuable role in governance.; The third paper uses a sample of 1562 board committees in 358 Fortune 500 companies in 1998 to draw some conclusions about what boards do. I construct two measures of how important each task is for the board. One is an estimate of the number of hours the board devotes to each task. The other is a measure of the value of the resources devoted to each task. I show that boards appear to take their traditional oversight role seriously. On the other hand, boards perform a variety of tasks which are not traditional oversight duties.; The fourth paper reviews the governance literature.