Accountability processes in boardrooms

Niamh Brennan (), Collette E. Kirwan and John Redmond

Accounting, Auditing & Accountability Journal, 2016, vol. 29, issue 1, 135-164

Abstract: Purpose - – The purpose of this paper is to understand the influence of information and knowledge exchange and sharing between managers and non-executive directors is important in assessing the dynamic processes of accountability in boardrooms. By analysing information/knowledge at multiple levels, invoking the literature on implicit/tacit and explicit information/knowledge, the authors show that information asymmetry is a necessary condition for effective boards. The authors introduce a conceptual model of manager-non-executive director information asymmetry as an outcome of the interpretation of information/knowledge-sharing processes amongst board members. The model provides a more nuanced agenda of the management-board information asymmetry problem to enable a better understanding of the role of different types of information in practice. Design/methodology/approach - – The analysis of information/knowledge exchange, sharing and creation and the resultant conceptual model are based on the following elements: manager-non-executive director information/knowledge, management-board information/knowledge and board dynamics and reciprocal processes converting implicit/tacit into explicit information/knowledge. Findings - – The paper provides new insights into the dynamics of information/knowledge exchange, sharing and creation between managers and non-executive directors (individual level)/between management and boards (group level). The authors characterise this as a two-way process, back-and-forth between managers/executive directors and non-executive directors. The importance of relative/experienced “ignorance” of non-executive directors is revealed, which the authors term the “information asymmetry paradox”. Research limitations/implications - – The authors set out key opportunities for developing a research agenda from the model based on prior research of knowledge conversion processes and how these may be applied in a boardroom setting. Practical implications - – The model may assist directors in better understanding their roles and the division of labour between managers and non-executive directors from an information/knowledge perspective. Originality/value - – The authors apply Ikujiro Nonaka’s knowledge conversion framework to consider the transitioning from individual implicit personal to explicit shared information/knowledge, to understand the subtle processes at play in boardrooms influencing information/knowledge exchange, sharing and creation between managers and non-executive directors.

Keywords: Corporate governance; Information asymmetry; Non-executive directors; Board accountability; Board processes; Boards of directors (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:aaajpp:v:29:y:2016:i:1:p:135-164

DOI: 10.1108/AAAJ-10-2013-1505

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