Francois Belot (Université de Cergy-Pontoise), Edith Ginglinger (Université Paris-Dauphine), Myron B. Slovin (Independent) and Marie E. Sushka (Arizona State University) has posted “Freedom of Choice between Unitary and Two-Tier Boards: An Empirical Analysis”, Journal of Financial Economics (JFE), Forthcoming.
The abstract is as follows:
We examine board structure in France, which since 1966 has allowed firms freedom to choose between unitary and two-tier boards. We analyze how this choice relates to characteristics of the firm and its environment. Firms with severe asymmetric information tend to opt for unitary boards; firms with a potential for private benefits extraction tend to adopt two-tier boards. There is enhanced sensitivity of CEO turnover to performance at firms with two-tier boards, indicating greater monitoring. Our results are broadly consistent with the Adams and Ferreira (2007) model and suggest there are gains from allowing freedom of contract about board structure.