The Impact Of Deregulation On The Character Of A Firm’s Board

This paper analyzes the impact of deregulation on board structure by comparing the boards of electric utilities before and after the passage of the Energy Policy Act (EPACT) using a unique hand-collected data set. The primary focus of the study is on changes to the boards\u27 character, determined by the background and expertise of the directors. The results show that electric utilities change their board structure in response to their new operating environment. Boards are smaller and more independent in the later period. Also, even though the number of outside directors stays the same, there are two notable changes in the character of these directors. The number of executives from large firms and the number of directors with political backgrounds are both significantly greater after the passage of EPACT. Overall, the results are consistent with Williamson\u27s hypothesis that firms will change the composition and character of their board in response to a change in the firm\u27s operating environment