How can we help independent directors to escape the “obedience bias?”: Comments on: Randall Morck (2008) “Behavioral finance in corporate governance—independent Directors, Non-Executive Chairs, and the importance of the Devil’s Advocate”

It is a real pleasure to have the opportunity to comment such a fascinating paper as Randall Morcks Behavioral Finance in Corporate Governance Independent Directors, Non-Executive Chairs, and the Importance of the Devils Advocate. Although it may not seem, since it is not stuffed with the analytical models or regression results we feel at home with, this is really a brilliant research paper that will have an impact on the way academicians think about one of the most enduringly fashionable subjects in business and nancecorporate governance. Randall Morck poses at the center of the debate about the theory of corporate governance the need to employ analytic devices drawn from behavioral sciences. He provides an illuminating (and of rare entertainment) example of how far this approach can allow us to go, when we consider the problems in the interaction of a restricted number of human beings sitting at a common table in order to decide by majority voting. It is difficult not to be convinced of the loyalty bias argument as a possible explanation of the aberrant and apparently illogical behavior of so many respectable board members in plenty of corporate governance disasters. The proposal that this can be a major determinant of agents behavior, so much as to merit the inclusion in the agency theory as a type 2 agency problem alongside the well-known type 1, is seductive.