CORPORATE GOVERNANCE: THEORY, EVIDENCE AND POLICY Lecture 2. Disclosure and Conflicts of interest by Marco Becht ECARES, Universite Libre de Bruxelles Patrick Bolton Columbia University Ailsa Roell Columbia University June 2007 Abstract: This chapter considers disclosure policy and corporate gover- nance regulations on boards of directors. It builds on the workhorse model of corporate governance of chapter 1 to analyze how mandatory disclosure policies can help mitigate the agency problem between management and shareholders. It then extends the model to introduce a role for the board of directors, and explores the dual role of boards as advisors and monitors. Finally a simple model of board deliberations is analyzed to help understand what governance rules on boards help improve board decision-making. The evidence on the role of independent directors is discussed, as well as the question on how to regulate the process of board appointments. 1