Working Paper: NBER ID: w31209
Authors: Nadya Malenko
Abstract: This survey provides an overview of theoretical and empirical research on information flows in corporations. It highlights key frictions preventing effective information flows and discusses how organizational structure and corporate governance can alleviate these frictions, focusing on three broad topics: 1) organizational design, such as the choice between centralized and decentralized decision-making; 2) composition and decision-making process of the board of directors; and 3) communication among shareholders and between shareholders and management in the context of shareholder activism. The goal of the survey is to draw connections between theoretical and empirical work and point out directions for future research.
Keywords: Information Flows; Corporate Governance; Organizational Structure
JEL Codes: D82; D83; G34; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Centralized decision-making (D70) | Greater information loss (D89) |
| Decentralized decision-making (D70) | More effective use of local information (D89) |
| Delegating authority (M54) | More informed decisions (D80) |
| Increased conflict of interest (G34) | Decreased efficiency of communication (L96) |
| Decreased efficiency of communication (L96) | Loss of information (D89) |
| Alignment of interests (L14) | Alleviation of inefficiencies (D61) |
| Changes in governance structure (G38) | Improved information flow (D83) |
| Changes in governance structure (G38) | Improved decision-making outcomes (D91) |