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If corporations are people, and have defensible political and religious views, can they take the place of humans on a BoD?

It seems farfetched. Two law professors (Bainbridge and Henderson) propose investors hire a "board service provider" (BSP) instead of electing individuals. Companies would retain firms like accountants or management consultants to provide the same services that individual directors now provide.

Normally, we automatically suspect a scheme like this. One of the authors is noted corporate stooge Stephen Bainbridge. Both authors have worked for the accounting firms that could become BSPs. Instead, we'll analyze the idea with some care.

We think individual directors represent investors better, and at a lower cost to investors, than a BSP would. We apply agency theory to BoDs to conclude that agency costs will likely increase with a BSP. This follows from the reasoning in our recent essay on the agency problem (AP, so we'll stop here) at the intersection of investors, directors, and executives. We mention BSPs briefly in the essay, and expand on that discussion in a current blog post.

Recent TAI blog posts

You can find other useful resources at the TAI website, including our research on "Effective Activism, on the Cheap", our new resource guide on activist investing data sourcesour white paper with the basics on activist investing, and our new guides on exempt solicitationconsent solicitation, and special shareholder meetings. 
For further information, please contact:
 
Michael R. Levin
[email protected]
847.830.1479