Revisiting Board Structure: A New Theoretical Model Without Agency Conflicts

This paper develops a theoretical model of board structure that moves beyond traditional frameworks focused on agency conflicts and strategic bargaining. Unlike existing models that emphasize power dynamics between CEOs and boards, our approach allows shareholders to directly determine board composition to maximize market value. Our model also explains how boards adjust in response to firm-specific factors, such as varying levels of size, uncertainty and CEO competence, dynamically reallocating resources between monitoring and advising to optimize governance and firm outcomes. This perspective provides a direct link between board decisions and market value, offering a simplified yet strategic approach to corporate governance.