Boards of directors as an endogenously determined institution: a survey of the economic literature hermalin, e. b. , & weisbach m. s. , (2003) Research so far has established a number of empirical regularities: Board composition, as measured by insider-outsider ratio, is not correlated with firm performance: however, number of directors negatively related to the firm"s financial performance. Board actions do appear to be related to board characteristics: acquisitions, poison pills, compensation, and ceo replacement. Boards appear to evolve over time depending on the bargaining power of the ceo relative to the existing director. Adam smith directors of companies, managers of other peoples" money, can"t be expected to watch over it with same anxious vigilance as owners - negligence, profusion will always prevail. Berle & means - control will tend to be in the hands of those who select the proxy committee and by whom, the election of directors for ensuing period will be made.