ABSTRACT
Introduction The monitoring role of corporate boards in public corporations has become a central issue in both the financial and academic press. Berle and Means’s (1932) seminal work suggested that managers did not have sufficient equity in the firms they managed to give them the incentive to turn their full attention to profit maximization. As a result, managers may pursue self-interested initiatives at the expense of shareholders. One monitoring mechanism that may temper that tendency is the oversight of the board of directors: this oversight, or control, function of a board is often described as the most critical of directors’ roles (Fama, 1980; Mizruchi, 1983; Zahra and Pearce, 1989).
