Board directors' preferences - What are good aggregation rules?

- I model how directors with heterogeneous preferences affect information sharing.
- Coalition forming in the boardroom can be influenced by heterogeneous preferences.
- Heterogeneity differs for shareholder if there are any employees on the board.

I analyze how boards of directors with heterogeneous preferences can affect the information shared with the CEO with the help of a cheap-talk model that allows for large groups of receivers. This paper provides new insights on how heterogeneity of boards can change the way of communication between the board and the CEO, related to different ways of decision making. I also indicate how coalition forming in the boardroom can be influenced by heterogeneous preferences. Finally this model gives a possible answer why board of directors' heterogeneity differs for shareholder representatives if there are any employees on the board.