Identifying Key Determinants of Effective Boards of Directors

Abigail Levrau and Lutgart Berghe
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Abigail Levrau: GUBERNA
Lutgart Berghe: GUBERNA

Chapter 1 in Global Boards, 2009, pp 9-44 from Palgrave Macmillan

Abstract: Abstract Boards of directors are of interest to academics, the investment community, the business world and society at large. According to Cadbury (1999) this attention is understandable given the fact that boards of directors serve as a bridge between the shareholders, who provide capital, and management in charge of running the company. At the heart of the corporate governance debate is the view that the board of directors is the guardian of shareholders’ interest (Dalton et al., 1998). Yet, boards are being criticized for failing to meet their governance responsibilities. Major institutional investors put pressure on (incompetent) directors and have long advocated changes in the board structure (Monks and Minow, 2001). Their call has been strengthened by many corporate governance reforms resulting from major corporate failures. The reforms put great emphasis on formal issues such as board independence, board leadership structure, board size and committees (Weil et al., 2002; Van den Berghe and De Ridder, 1999). These structural measures are assumed to be important means to enhance the power of the board, protect shareholders’ interest, and hence, increase shareholder wealth (Becht et al., 2002; Westphal, 1998).

Keywords: Corporate Governance; Board Member; Independent Director; Board Size; Strategic Management Journal (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-25051-2_2

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DOI: 10.1057/9780230250512_2

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