Are Large Boards Poor Monitors? Evidence from CEO Turnover

Ok, let me see if I have this right. Size does matter and smaller is better? Faleye reports that large boards of directors are less likely to replace existing CEOs and if the CEO replaced, less likely to find a successor from outside the firm. Moreover, when firms announce smaller boards, the firm’s stock return is positive. Thus Faleye concludes: “suggest that a … [ Read more ]

When Labor Has a Voice in Corporate Governance

Employees may not make good owners after all! Faleye,Mehrotra,and Morck study firms where there are large blocks of employee owned shares that ARE VOTED. Their findings may surprise some people: “Relative to otherwise similar firms, labor-controlled publicly traded firms invest less, take fewer risks, grow more slowly, create fewer new jobs, have worse free cash flow problems, and exhibit lower labor and total factor … [ Read more ]