Edited by Todd J. Zywicki and Peter J. Boettke
Chapter 16: Firms without boards: unleashing the Hayekian firm
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.
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