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What do Boards Really Do? Evidence from Minutes of Board Meetings

With Michael S. Weisbach, Journal of Financial Economics 108, 349–366 (2013).

We analyze a unique database from a sample of real-world boardrooms – minutes of board meetings and board-committee meetings of eleven business companies for which the Israeli government holds a substantial equity interest. We use these data to evaluate the underlying assumptions and predictions of models of boards of directors. These models generally fall into two categories: “managerial models” that assume boards play a direct role in managing the firm, and “supervisory models” that assume that boards monitor top management but do not make business decisions themselves. Consistent with the supervisory models, our minutes-based data suggest that boards spend most of their time monitoring management: approximately two-thirds of the issues boards discussed were of a supervisory nature, they were presented with only a single option in 99% of the issues discussed, and they disagreed with the CEO only 2.5% of the time. Nevertheless, at times boards do play a managerial role: Boards requested to receive further information or an update for 8% of the issues discussed, and they took an initiative with respect to 8.1% of them. In 63% of the meetings, boards took at least one of these actions or did not vote in line with the CEO. Taken together our results suggest that boards can be characterized as active monitors.

Gender and Board Activeness: The Role of a Critical Mass

Journal of Financial and Quantitative Analysis 52, 751-780 (2017). Slides.


Conferences: 2014 American Finance Association conference, 2013 American Economic Association, and 2014 Ackerman Conference on Corporate Governance.

Media Citations: NY Times, “Seeking Critical Mass of Gender Equality in the Boardroom”, 9/11/2012. Forbes, “Women on Corporate Boards Bring More Aggressive Action”, 1/7/2013. Bloomberg, “Why Corporate Boards Need More Women”, 1/4/2013


This study analyzes detailed minutes of board meetings of business companies in which the Israeli government holds a substantial equity interest. Boards with at least three directors of each gender are found to be at least 79% more active at board meetings than those without such representation. This phenomenon is driven by women directors in particular; they are more active when a critical mass of at least three women is in attendance. Gender-balanced boards are also more likely to replace underperforming CEOs and are particularly active during periods when CEOs are being replaced.

Working Papers

How are Shareholder Votes and Trades Related?

With Sophia Li

Presented at the AFA 2018, FARS 2018 Midyear Meeting, 2018 MFA, 2018 SEC Conference on Financial Market Regulation, 4th University of Connecticut Financial Risk Conference, CICF 2018, SFS Cavalcade 2019 (scheduled), Multinational Finance Society (scheduled), Hebrew University, Tel Aviv University, NYU, and Michigan State; Summary from Harvard Law Blog. 

We study the relation between shareholder votes and trading. We demonstrate that around the shareholder meeting date, the abnormal daily volume is substantially larger compared to the pre-voting period. This increase exists even for routine votes, and it is particularly large for important votes and when shareholders are unsupportive of management. We next analyze the vote-trade relationship at the investor level, using data on daily trades and the corresponding votes of the same funds. We find that before the meetings, funds’ trades and votes are positively correlated. However, funds update their trading patterns when a vote outcome contradicts the vote they cast.  We also show that votes catalyze trading particularly when the price reaction is large, higher degrees of information asymmetries exist, and investors are not distracted.

Blockholder Heterogeneity, Multiple Blocks, and the Dance Between Blockholders

With Charlie Hadlock

Presented at EFA 2017, FMA 2017 (semifinalist for the best paper award), 2018 Colorado Front Range, 2018 CEIBS, Wayne State, Hebrew University of Jerusalem, Tel Aviv University, and IDC. 

We examine blockholder presence across 41,673 firm-years from 2001 to 2014 using manually classified information on block positions.  Blockholders are present in 91.9% of sample firms and most firms have multiple blockholders (73.8%), with a sample median of 3 blocks.  These blocks are often of different types, including individuals, financial institutions and strategic investors.  We identify variation across blockholder types in the determinants of investment decisions, indicating substantial heterogeneity in their governance roles.  The evidence is consistent with the hypothesis that many non-financial blockholders play a monitoring/incentive role, while financial blocks appear more likely to affect governance through trading decisions (e.g., Edmans (2009)).  We find strong evidence of interdependence in blockholder investment decisions in the sense that potential blockholders condition their participation decisions on the presence of others.  Consistent with Zwiebel (1995), in many cases this relation is negative, as the presence of one blockholder appears to crowd out other possible blockholdings, in some cases by a factor of more than one third.  This behavior is particularly evident for larger blocks and non-financial blocks.  However, consistent with alternative theories of positive blockholder interdependence (e.g., Edmans and Manso (2011)), in some firms we observe clustering of an abnormally high number of relatively small and symmetric block positions, often dominated by financial institutions.

Which Shareholders Benefit from Low-Cost Monitoring Opportunities? Evidence from Say on Pay

With Russ Wermers. Slides.

Presented at EFA 2016, SEC Conference on Financial Market Regulation, DePaul Conf. in Corp. Social Responsibility, ECGI Conference on Corporate Governance 2017*, and MARC 2018


Theories of free-riding predict that only large shareholders will monitor management. We document that, when shareholders are given a low-cost opportunity to monitor and discipline management, small institutional shareholders are particularly likely to do so. We focus on the “Say-On-Pay” (SOP) vote, because it represents the best low-cost opportunity shareholders have. By examining three levels of votes — aggregate, institutional, and fund level — we document that institutions with a smaller ownership stake in a company are particularly likely to vote against management. Further, firms are particularly likely to demonstrate responsiveness to SOP when non-insider blockholders are present.

The Lifecycle of Ownership and Governance: New Evidence from Nonfinancial Blockholders

With James Weston

Presented at the MFA 2018, WAPFIN@Stern NYU 2018, 2019 Finance Summer conference in Jerusalem (scheduled).

We show that firms with nonfinancial (“committed”) blockholders, like individuals and private equity firms, have different corporate governance mechanisms than firms with institutional blocks. In general, firms with committed blockholders are younger and have less agency problems and fewer formal mechanisms in place for external governance. Committed firms are less targeted by shareholder activism (voting patterns, shark attacks) and appear less concerned with preventing external monitoring (less poison pills, classified boards, and reporting transparency). Our findings highlight the transition many firms make as they mature and their shareholder base shifts from committed owners towards institutional owners.  We employ firm age and headquarters location as an instrument for nonfinancial blockholding and continue to find that firms with committed blocks tend to employ less external mechanisms for monitoring and control.  Finally, we find that firms with committed blockholdings perform better on a variety of performance measures.  Overall, our study highlights the process through which firms transition their governance characteristics to match changes in their shareholder base.

Our Directors on Their Boards: Do Mutual Funds and Companies with Overlapping Directors Scratch Each Other's Backs?

With Qingqiu Li

Presented at the FMA 2017 (by coauthor), American Law and Economics Association conference 2018, IDC, MFA 2019 (scheduled), Multinational Finance Society (scheduled).


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