A Theory of Friendly Boards 学号：17720990 报告人：李梦真

Contents Introduction Literature Review A B Methods conclusion C D

1 PART Introduction

We analyze the consequences of the board’s dual role as advisor as well as monitor of management. Given this dual role, the CEO faces a trade-off in disclosing information to the board: If he reveals his information, he receives better advice; however, an informed board will also monitor him more intensively. Since an independent board is a tougher monitor, the CEO may be reluctant to share information with it. Thus ,management -friendly boards can be optimal. Using the insights from the model, we analyze the differences between sole and dual board systems. We highlight several policy implications of our analysis.

2 PART Literature Review

Both the business roundtable and the American Law Institute list the pro-vision of advice to management among the top five functions of boards of directors in the United States (Monks and Minnow (1996)). The advisory role of boards is important not only in the sole board system in the United States, but also in the dual board system in According to the American Bar Association’s Committee on Corporate Laws (1994), this means, among other things, that the board must review and approve fundamental operating and financial decisions, and other corporate plans and strategies. Because managers’ preferred projects are not always those that maximize shareholder value, directors must be willing to with hold approval and insist on change.

点击此处添加标题 Several theoretical papers in the finance literature examine why boards may Not monitor too intensively. Warther (1998) shows how the management’s power to eject board members may result in a passive board. Similarly, Hermalin and Weisbach (1998) use a manager’spower over the board selection process to show how board composition is a function of the board’s monitoring intensity. These authors also describe how a passive board may arise. Almazan and Suarez (2003) argue that passive (or weak) boards may be optimal because, in their framework, severance pay and weak boards are substitutes for costly incentive compensation. Our paper is similar to Almazan and Suarez (2003) in that we also show that it might be optimal to have a passive (or, in our terminology, management-friendly) board. However, in our paper the driving forces behind this result are the potential conflicts between the different roles of the board.

3 PART Methods

The Model A B The theory in this paper builds upon four basic ideas. First, the CEO dislikes monitoring by the board because he values control. Second, the CEO likes advising by the board because advice increases firm value without interfering with his choices. Third, both monitoring and advising by the board are more effective when the board is better informed. Finally, in both roles, the board depends crucially on the CEO for firm-specific information.

The Mode 点击此处添加标题 点击此处添加标题 点击此处添加标题 Managerial Private Benefits the figure shows the relationship between the expected monitoring intensity of the board in equilibrium and managerial private benefits when the information asymmetry between the manager and the board is not too extreme. The figure is not drawn to scale. b f is the level of private benefits below which the manager always shares his information and the expected monitoring intensity of the board is at the first-best level in equilibrium. b n is the level of private benefits above which the manager does not share his information. 点击此处添加标题 点击此处添加标题 标题数字等都可以通过点击和重新输入进行更改，顶部“开始”面板中可以对字体、字号、颜色等进行修改。建议正文8-14号字，1.3倍字间距。 标题数字等都可以通过点击和重新输入进行更改，顶部“开始”面板中可以对字体、字号、颜色等进行修改。建议正文8-14号字，1.3倍字间距。 点击此处添加标题

The Mode Optimal Board Independence and Managerial Private Benefits. The figure shows the relationship between optimal board independence and managerial private benefits when the information asymmetry between the manager and the board is not too extreme. The figure is not drawn to scale. b f is the level of private benefits below which the manager always shares his information and board independence is equal to one. b n is the level of private benefits above which the manager does not share his information. 点击此处添加标题 点击此处添加标题 点击此处添加标题 点击此添加标题

4 PART Conclusion

conclusion Adams and Ferreira from the advice of the board of directors function, found that the board of directors for the modest friendly that managers can make the latter report the true information, the board of directors can offer decision-making advice according to the better. However, the reduction of supervision does not necessarily represent social friendliness, or it may be a game strategy of the parties. An important assumption of Adams and Ferreira is that the stronger the independence of the board, the lower the marginal cost of director supervision. In other words, they think that social relations will reduce the ability of directors to supervise.

5 PART 总结

总结 点击此亚当和费雷拉（Adam and Ferreira）从董事会的建议功能出发，发现董事会对经理层的适度友好可以促使后者汇报真实信息， 董事会可以 据 此更好地提供决策建议。但是，减少监督并不一定代表社会性的友好，也可能只是当事人的博弈策略。亚当和费雷拉的一个重要假定是董事会独立性越强，董事监督的边际成本越低。也就是说他们认为社会关系会降低董事的监督能力。但是，我个人认为，这是不符合事实的。社会关系的存在使得彼此更了解对方，应该更容易低成本监督，至少不会降低他们的监督能力。现实中，社会关系直接影响的是行为人的意愿而不是能力。 标题数字等都可以通过点击和重新输入进行更改，顶部“开始”面板中可以对字体、字号等进行修改。标题数字等都可以通过点击和重新输入进行更改，顶部“开始”面板中可以对字体、字号等进行修改。 点击此处添加标题 标题数字等都可以通过点击和重新输入进行更改，顶部“开始”面板中可以对字体、字号等进行修改。标题数字等都可以通过点击和重新输入进行更改，顶部“开始”面板中可以对字体、字号等进行修改。

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