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Look Inside Outsourcing the Board

Outsourcing the Board
How Board Service Providers Can Improve Corporate Governance

  • Publication planned for: July 2018
  • availability: Not yet published - available from July 2018
  • format: Paperback
  • isbn: 9781316645123


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About the Authors
  • In this groundbreaking work, Stephen M. Bainbridge and M. Todd Henderson change the conversation about corporate governance by examining the origins, roles, and performance of boards with a simple question in mind: why does the law require governance to be delivered through individual board members? While tracing the development of boards from quasi-political bodies through the current 'monitoring' role, the authors find the reasons for this requirement to be wanting. Instead, they propose that corporations be permitted to hire other business associations - known as 'Board Service Providers' or BSPs - to provide governance services. Just as corporations hire law firms, accounting firms, and consulting firms, so too should they be permitted to hire governance firms, a small change that will dramatically increase board accountability and enable governance to be delivered more efficiently. Outsourcing the Board should be read by academics, policymakers, and those within the corporations that will benefit from this change.

    • This groundbreaking work proposes a radical new approach to corporate governance through a revolutionary new way of structuring the board of directors
    • Avoids the use of mathematical treatments, technical jargon, and other obfuscating devices
    • Proposes a new model for boards that is not ideological and is neutral in the debates about the relative benefits of increasing manager or shareholder power
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    Product details

    • Publication planned for: July 2018
    • format: Paperback
    • isbn: 9781316645123
    • dimensions: 228 x 152 mm
    • availability: Not yet published - available from July 2018
  • Table of Contents

    Part I. Corporate Boards:
    1. A brief history of the board
    1.1. The political origins of corporate boards
    1.2. The privatization of the corporation and the changing role of the board
    1.3. The board's evolving modern role
    1.4. Summary
    2. What do Boards do?
    2.1. The roles played by the modern corporate board
    2.2. Management
    2.3. Service
    2.4. Monitoring
    2.5. Diversity
    2.6. Overlapping roles and the crudeness of categories
    2.7. Role conflicts
    2.8. Evolution over time
    3. Grading boards
    3.1. Public perceptions
    3.2. Even graded on a curve, boards fail
    3.3. Boards fail even at grading themselves
    3.4. Showing improvement
    3.5. But there's still room for improvement
    4. Why boards fail
    4.1. Introduction
    4.2. Time constraints
    4.3. Information asymmetries
    4.4. Too many generalists
    4.5. Bad incentives
    4.6. Boards refuse to lead
    4.7. Boards lack cohesiveness
    4.8. SOX locked boards into a one size fits all model
    Part II. The Board Service Provider:
    5. Board service providers: the basic idea
    5.1. Introduction
    5.2. The board service provider
    5.3. Appointment and elections
    5.4. Composition and function
    5.5. Compensation
    5.6. Liability
    5.7. Summary
    6. How BSPs address the pathologies of modern corporate governance
    6.1. Managerial hegemony theory
    6.2. Class hegemony theory
    6.3. Resource dependence theory
    6.4. Stakeholder theory
    6.5. Stewardship theory
    6.6. Agency theory
    6.7. Summary
    7. Incentivizing the BSP
    7.1. Compensation incentives
    7.2. Liability-based incentives
    7.3. Reputational incentives
    7.4. Exposure to market forces
    7.5. Measurability
    Part III. Legal Issues:
    8. BSPs and the law
    8.1. Legal obstacles to BSPs under US Federal and state law
    8.2. The law in other countries
    8.3. The case for changing the law
    9. BSPs and the emerging Federal Law of corporations
    9.1. Director independence
    9.2. BSPs and the CEO/Chair duality issue
    9.3. The audit committee
    9.4. Section 404 internal controls
    9.5. The compensation committee
    9.6. The nominating committee
    Part IV. BSPs and the Frontiers of Corporate Governance:
    10. BSPs and proxy access
    10.1. A brief overview of proxy access
    10.2. Proxy access and BSPs
    11. The BSP as an alternative to quinquennial board elections
    11.1. Introduction
    11.2. The quinquennial election proposal
    11.3. The quinquennial election and the BSP
    11.4. Quinquennial elections and mandatory rotation of the BSP
    11.5. Summary
    12. The BSP in a post-monitoring board world
    12.1. The thickly informed board
    12.2. The BSP as thickly informed board
    12.3. The private equity analog
    12.4. Summary
    Part V. Concluding Thoughts:
    13. Anticipating objections
    13.1. Overcoming the status quo bias
    13.2. Reduced accountability
    13.3. Loss of personal service
    13.4. Loss of advantages of group decision making
    13.5. BSPs will be captured by management
    13.6. BSP incentives inadequately aligned to shareholder interests
    13.7. Isn't this just one more costly intermediary?
    13.8. Conflicts of interest
    14. Conclusion.

  • Authors

    Stephen M. Bainbridge, University of California, Los Angeles School of Law
    Stephen M. Bainbridge is the William D. Warren Distinguished Professor of Law at University of California, Los Angeles, School of Law, where he teaches courses in corporate law and governance. Bainbridge has written over a dozen books and a hundred law review articles. He is best known as the originator of the director primacy theory of corporate governance. In 2008, 2011, and 2012, he was named by the National Association of Corporate Directors as one of the 100 most influential people in the field of corporate governance. His blog,, has been named five times by ABA Journal as one of the Top 100 Law Blogs.

    M. Todd Henderson, University of Chicago School of Law
    M. Todd Henderson is the Michael J. Marks Professor of Law and Mark Claster Mamolen Research Scholar at the University of Chicago Law School. Henderson researches and teaches in a wide range of fields from corporate law to American Indian law. His work has appeared in leading law reviews and has been covered in The Wall Street Journal and The Economist, among other places. Henderson is a frequent commentator in the media and at conferences around the world on topics of corporate governance. He serves as a strategic advisor to several start-up companies.

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