are important in
distinguishing between fraud and no-fraud firms, the type of owner is less so. The authors
conclude that the proportion of outside directors, the number of board meetings, and the tenure
of the board chair are associated with the incidence of fraud.
Taking a different perspective, Berry et al. (2006-this issue) examine the evolution of board
and other governance structures in young firms after they undertake IPOs. In particular, the
authors examine how board structure (including board independence and venture capitalist (VC)
representation), CEO ownership, VC ownership, CEO incentive pay, and unaffiliated
blockholdings change for up to 11 years after the IPO. The authors find that board independence
and the proportion of board seats held by VC’s increase as CEO ownership declines (a result that
is concentrated in those firms that survive the authors’ 11-year sample period). The authors
suggest that as one governance mechanism designed to control agency costs weakens (CEO
ownership) others (board structures) strengthen to fill the void.
Also of note, although I emphasize elements of board structure in this discussion, the pap
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