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Firms without boards: unleashing the Hayekian firm

In: Research Handbook on Austrian Law and Economics

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  • M. Todd Henderson

Abstract

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.

Suggested Citation

  • M. Todd Henderson, 2017. "Firms without boards: unleashing the Hayekian firm," Chapters, in: Todd J. Zywicki & Peter J. Boettke (ed.), Research Handbook on Austrian Law and Economics, chapter 16, pages 348-370, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:13939_16
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    Economics and Finance; Law - Academic;

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