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J. Mark Ramseyer to Give Raben Lecture, "Evidence on Outside Directors from Japan," March 30

 J. Mark Ramseyer, Mitsubishi Professor of Japanese Legal Studies at Harvard Law School, will give the 2003-04 John R. Raben Lecture, titled "Who Appoints Them, What Do they Do? Evidence on Outside Directors from Japan," on Tuesday, March 30, 2004, at 4:30 p.m., in Room 127. The talk is free and open to the public.

Since the slate of corporate scandals that began with the collapse of Enron two years ago, many reformers and policy makers have examined the role of the board of directors in these events. Ramseyer and coauthor Yoshiro Miwa write in the paper that will form the basis of his talk that "Persistently, reformers claim that firms should increase the outside directors they name to the board. If they will not appoint more outsiders on their own, the law should mandate the increase." However, Ramseyer and Miwa point out that this approach ignores an important tradeoff. "What outsiders offer in independence, they sacrifice in expertise."

Ramseyer and Miwa continue, "If boards matter, then the logic of market competition suggests that firms should tend to appoint outsiders at levels that approach their firm-specific optimum."

Securities laws in the U.S. make it impossible to test objectively whether the number of independent board members helps a company or whether firms find an optimum number, so the authors turned to Japan. They studied the 1,000 largest exchange-listed Japanese firms from 1986-94, looking at what types of companies had fewer or more outside directors and how this affected their performance.

Ramseyer will present an analysis of his findings in his Raben Lecture, "Who Appoints Them, What Do they Do? Evidence on Outside Directors from Japan."