PhD thesis: Behavioral corporate governance

Van der Laan’s thesis aims to offer a behavioral approach to corporate governance. Economic and legal research to date yields inconclusive evidence, which inspired the current thesis. For example, it is not clear whether independent non-executive directors contribute unambigously to the performance of their corporations. Key constructs in the four chapters are independence and power of executive directors, non-executive directors, and external stakeholders. The hypotheses have been tested on Dutch, U.S., and Norwegian data.

The findings of the thesis point to various effects of power and independence on the performance of the corporation. Perceived proximity - a measure of dependence - of the chief executive officer (CEO) and the chairperson of the supervisory board in Norwegian companies is positively associated with the involvement of non-executive directors. Companies in which such proximity is present show better performance of the supervisory board both with respect to the strategic and the monitoring tasks. This indicates that independence is not a panacea.

Beneficial effects of independence are documented, to the contrary, in the context of corporate governance codes. It is found that an independent board of directors is able to accomplish compliance with best practice provisions in the area of executive compensation. Without an independent supervisory board, executives are tempted not to comply with these provisions. This also points to the relevance of the power of CEOs. However, in yet another chapter, it is found that there is no demonstrable relationship between CEO power and CEO compensation.

Van der Laan will be awarded his PhD in Economics and Business on January 22 (4.15pm). His supervisors are prof.dr. H. van Ees and prof.dr. A. van Witteloostuijn. The title of the thsis is: Behavioral corporate governance: four empirical studies.