Letting Companies Choose Between One-Tier and Two-Tier Board

When: 12 Dec 2019, 14:15-15:30
Where: HoF 1.28/Shanghai
Speaker: Martin Gelter

Design of a suitable board structure is a key aspect of good corporate governance. Today, many European countries not only allow modifications in detail but a choice between a one-tier model (i.e. a single board of directors) and a two-tier board model (i.e. a split between management and supervisory board). Yet, empirical research on the actual choices made by companies is rare. This paper aims to fill this gap. It presents original data about the choice of board models from the 14 EU countries that allow such choice. Amongst others, it finds that there are profound country differences in the prevalence for one of the board models, that the availability of choice mainly leads to a decline of the two-tier model, and that two-tier companies tend to be larger, older, more complex and more diverse (e.g., in terms of female or foreign board membership). The paper also discusses the practical and normative implications from our empirical findings.

 

 

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