Why Do Boards Exist? Governance Design in the Absence of Corporate Law

Mike Burkart, Salvatore Miglietta, Charlotte Østergaard*

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


We study under which circumstances firms choose to install boards and their roles in a historical setting in which neither boards nor their duties are mandated by law. Boards arise in firms with large, heterogeneous shareholder bases. We propose that an important role of boards is to mediate between heterogeneous shareholders with divergent interests. Voting restrictions are common and ensure that boards are representative and not captured by large blockholders. Boards are given significant powers to both mediate and monitor management, and these roles are intrinsically linked.
Original languageEnglish
Article numberhhac072
JournalThe Review of Financial Studies
Issue number5
Pages (from-to)1788-1836
Number of pages49
Publication statusPublished - May 2023

Bibliographical note

Published online: 30 September 2022.

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