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Henderson, M. Todd --- "Firms without boards: unleashing the Hayekian firm" [2017] ELECD 1582; in Zywicki, J. Todd; Boettke, J. Peter (eds), "Research Handbook on Austrian Law and Economics" (Edward Elgar Publishing, 2017) 348

Book Title: Research Handbook on Austrian Law and Economics

Editor(s): Zywicki, J. Todd; Boettke, J. Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849801133

Section: Chapter 16

Section Title: Firms without boards: unleashing the Hayekian firm

Author(s): Henderson, M. Todd

Number of pages: 23

Abstract/Description:

This chapter argues that a board of directors, a mandated feature of all public corporations in the United States, may not be consistent with the Hayekian notion of spontaneous order. A board of directors can be viewed as a form of central planning and suffer from the same defect of central planning: its inability to effectively harness dispersed knowledge for decision-making. The recent notorious failures of corporate governance, such as those of Enron, WorldCom, Lehman Brothers and AIG, suggest that boards of directors may, indeed, be a creature of government regulation and would not exist to the same degree, if at all, in a free market.