Do Firms Adjust To A Target Board Structure?

The authors propose that firms have economically efficient and optimal board structures which they adjust to over time. Using a partial adjustment model and a broad panel of board structure changes over the period from 1991 - 2003, they find evidence in support of this hypothesis. Over any two year period, they find that firms close about 45% of the gap between their actual board size and target board size, and they close about 63% of the gap between their actual board independence and target board independence.

Provided by: University of Delaware Topic: Software Date Added: Oct 2007 Format: PDF

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