This chapter has been largely theoretical. A conflict perspective of board organization suggests that board structures that separate decision management from decision control may effectively avert agency problems associated with the division of board roles in publicly held corporations.
One-tier and two-tier board models present different routes to reduce agency problems. Three assumptions (A.1a, A.1b and A.1d) suggest a negative association between the attributes of one-tier boards and the formal independence of these boards. Assumption A.1c suggests a positive association between the formation of independent oversight board committees and the independence of one-tier boards.
See also figure 3.1 for an overview of assumptions on the relationship between board independence and the attributes of one-tier boards. A conflict perspective of board organization suggests a positive relationship between the attributes and the independence of two-tier boards.
The Formal Independence of One-Tier Boards
To formalize this observation, this chapter presents four assumptions on two-tier board attributes and the separation of decision management from decision control. The composition of the supervisory board (assumption A.2a), the absence of dual board leadership structures (assumption A.2b) and the formal division of board roles (assumption A.2d) are positively associated with board independence (see also figure 3.2).
The Formal Independence of Two-Tier Boards
A mixed composition of supervisory board committees is negatively associated with the formal independence of two-tier boards (assumption A.2c). Part II of this research further explores the assumptions on the independence of one-tier and two-tier boards in the US, the UK and the Netherlands. The next chapter first presents an opposite train of thought on the relationship between board independence and board model attributes.
|←Previous 3.4 A Conflict Perspective of Two-Tier Board Model Attributes|