A minimum theory of boards
by Steen Thomsen
International Journal of Corporate Governance (IJCG), Vol. 1, No. 1, 2008

Abstract: I propose a 'minimum theory' of company boards. Compared with other actors like managers, large owners and auditors, boards have a comparative advantage in classical board functions such as monitoring, management replacement, control and ratification of major decisions. While the expertise accumulated by doing these jobs may also be useful in business strategy, risk management, shareholder and stakeholder relations, I argue that the marginal value of additional board work declines steeply and becomes negative if boards are overloaded with responsibility. Because of the empowerment of boards, the risk of overload appears to have increased in recent years.

Online publication date: Tue, 25-Mar-2008

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