The link between board characteristics and EU competition law infringements

Competition law infringements have been theorised to be a consequence of flawed monitoring by the board of directors. The focus of European Union competition law on sanctioning undertakings, rather than individuals, offers a particularly interesting context to empirically test this theory. The study uses agency theory for this purpose to analyse the relationship between a number of characteristics of the board of directors and European Union competition law infringements. It encompasses all listed undertakings that have committed a European Union competition law infringement since 2003, irrespective of their nationality. After controlling for temporal, geographic and industry-related effects, it finds that a CEO/Chair duality is associated with an increased likelihood of committing an EU competition law infringement, while increased gender diversity is associated with a decreased likelihood. No relationship was found between European Union competition law infringements and the ratio of non-executive directors, the ratio of directors appointed after the CEO, board tenure, CEO tenure, CEO compensation or the size of the board. The results indicate that future governance initiatives aimed at increasing gender diversity and separating the functions of CEO and chairperson might also be relevant for competition law policy.