Title: A minimum theory of boards

Authors: Steen Thomsen

Addresses: Center for Corporate Governance, Copenhagen Business School, Porcelaeshaven 24A, Building No. 65, 2000 Copenhagen F, Denmark

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.

Keywords: company boards; company performance; corporate governance; board empowerment; board overload.

DOI: 10.1504/IJCG.2008.017651

International Journal of Corporate Governance, 2008 Vol.1 No.1, pp.73 - 96

Published online: 25 Mar 2008 *

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