The Relationship Between Ownership Structure and Role of Board

Abstract

This paper develops a theoretical model to better understand how the priorities of the board of directors are influenced by the ownership structure and how that affects firm performance. Most corporate governance research focuses on a universal link between corporate governance practices (board structure, shareholder) and performance outcomes. This study suggest that the ownership structure has an important influence on the priorities set by the board and that these priorities will determine the optimal composition of the board of directors. We provide a framework on the interaction between ownership, corporate boards and firm performance.