What Do Boards Do? Evidence from Board Committee and Director Compensation Data

38 Pages Posted: 2 Sep 2005

Date Written: March 13, 2003

Abstract

This paper uses data on 1542 board committees and director compensation in a sample of 352 Fortune 500 companies in 1998 to analyze variation in board behavior. I use this data to quantify the amount of effort boards devote to their three different functions: monitoring, dealing with strategic issues and considering the interests of stakeholders. I show that boards appear to take their traditional oversight role seriously, since on average boards devote effort primarily to monitoring. However, there is a fair amount of variation across firms in the amount of effort boards devote to their different functions. In particular boards of larger firms and firms that face more uncertainty devote relatively less effort to monitoring, while boards of diversified firms devote relatively more effort to monitoring. Boards of larger, growing and older firms devote more effort to stakeholder interests on both an absolute and a relative basis. Finally, boards of growing firms devote relatively more effort to strategic issues.

Keywords: Board of Directors; Committee, Compensation, Effort, Monitoring, Strategy, Stakeholder

JEL Classification: G30, G34, J31, J33, J44

Suggested Citation

Adams, Renée B., What Do Boards Do? Evidence from Board Committee and Director Compensation Data (March 13, 2003). Available at SSRN: https://ssrn.com/abstract=397401 or http://dx.doi.org/10.2139/ssrn.397401

Renée B. Adams (Contact Author)

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

ABFER

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2,880
Abstract Views
10,495
rank
5,003
PlumX Metrics