Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature

[...]This paper surveys the research on boards of directors in theeconomics and finance literature. Boards of directors are aneconomic institution that, in theory, helps to solve the agencyproblems inherent in managing an organization. Althoughboards satisfy numerous regulatory requirements, theireconomic function is determined by the organizationalproblems they help to address. Yet formal economic theory onboards has been quite limited. For example, the characteristicsof agency problems that could lead to boards being theequilibrium solution have not yet been specified. Similarly, theconditions under which regulation of boards will lead toimprovements are unknown.[...]