What do Boards Really Do? Evidence from Minutes of Board Meetings / Miriam Schwartz-Ziv, Michael Weisbach.

Format:

Book

Author/Creator:

Schwartz-Ziv, Miriam.

Contributor:

National Bureau of Economic Research.

Weisbach, Michael.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17509.

NBER working paper series no. w17509

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

We analyze a unique database from a sample of real-world boardrooms - minutes of board meetings and board-committee meetings of eleven business companies for which the Israeli government holds a substantial equity interest. We use these data to evaluate the underlying assumptions and predictions of models of boards of directors. These models generally fall into two categories: "managerial models" assume boards play a direct role in managing the firm, and "supervisory models" assume that boards' monitor top management but do not make business decisions themselves. Consistent with the supervisory models, our minutes-based data suggest that boards spend most of their time monitoring management: 67% of the issues they discussed were of a supervisory nature, they were presented with only a single option in 99% of the issues discussed, and they disagreed with the CEO only 3.3% of the time. In addition, managerial models describe boards at times as well: Boards requested to receive further information or an update for 8% of the issues discussed, and they took an initiative with respect to 8.1% of them. In 63% of the meetings, boards took at least one of these actions or did not vote in line with the CEO.

Notes:

Print version record

October 2011.