Directors’ Ties to Non-CEO Executives: Information Advantage or Entrenchment?

Understanding factors that facilitate or inhibit boards’ ability to monitor the chief executive officer (CEO) is central to corporate governance. In a recent paper, we analyze how informal relationships between directors and non-CEO executives (hereafter, internal ties) affect board effectiveness.

This overlooked dimension of corporate boards may improve board performance by creating an alternative channel through which valuable information can flow to the board. Social ties between directors and executives may increase the likelihood of information sharing because social connections often lead to more frequent interactions and, more importantly, foster trust between the connected parties. As a result, directors with … Read more