Death by Committee? An Analysis of Delegation in Corporate Board

Boards are working harder over time, but are they working better?  While readily observable board characteristics have not changed much over time, boards have increasingly delegated responsibilities to committees, staffed by independent directors. We find evidence that this delegation may have erected barriers to communication and elective board decision-making.  Reform-induced delegation does not appear to be value-enhancing; a conservative estimate suggests that Tobin’s q of the typical firm in the sample decreases by 1.7% after the reforms. Board committees are relatively understudied, but our results suggest that ignoring them leads to a very incomplete picture of board governance.