Inherent conflict between ceo and directors: ceo has incentives to capture board to ensure that he keeps his job and increases his benefits, director has incentives to maintain independence, monitor ceo, replace ceo in case of poor performance. Why are there boards of directors: regulatory-based explanation, hypothesis: are simply product of regulation most firms required to have board that meets requirements, existence of governing boards predates regulations. Incentives not clear have incentives to build reputations as expert monitors: at same time reputation as director who does not make trouble to ceo valuable to director as well. Empirical studies on boards of directors: empirical studies estimate equations. The board"s influence on corporate performance: examining equation 4, the impact of board composition and board size on corporate performance. Board composition and corporate performance: no relationship between board composition on long-term stock market and accounting performance, overall little to suggest that board composition has cross-sectional relationship with firm performance.