Yuval Deutsch

The Impact of Board Composition on Firms’ Critical Decisions: A Meta-Analytic Review

To date, the results of agency theory-based research exploring the impact of board composition on firms’ critical decisions are equivocal. Through meta-analyses, this study reveals systematic relationships between board composition and six of the seven critical decisions examined. Interestingly, the results provide little support to agency theory’s predictions on the impact of board composition on critical decisions that involve a potential conflict of interest between managers and shareholders. Implications for theory and practice are discussed.

Decision Making in Acquisitions: The Effect of Outside Directors’ Compensation on Acquisition Patterns

This article examines how the compensation paid for outside directors affects firms’ acquisition behavior. Using panel data of Standard & Poor’s 1500 firms between 1996 and 2002, the authors find that stock and stock option pay for outside directors are related in an inverted U-shaped manner to a firm’s acquisition rate and that for stock options, this relationship is moderated by board composition. Their findings suggest a dual agency model of corporate governance, according to which not only executives’ incentives but also outside directors’ incentives should be aligned with the shareholder value creation.