Board of director performance reporting
Corporate Governance (Bradford) , Volume 8 - Issue 2 p. 165- 178
Purpose - This paper characterizes the role of the board of directors in a more specific way than has been done previously, and uses this characterization to support the argument that, in some cases, the mandate of an effective board should go beyond the prevention of self-interested behavior by management. The enlarged role for the board of directors that this paper contemplates carries with it the need to ensure shareholders that the board of directors is not engaging in self-interested behavior of its own, and posits that requiring the board of directors to report to shareholders on its activities and effectiveness is a potential solution to this problem. The paper seeks to present theoretically grounded ideas on how this might be done in a meaningful fashion. Design/methodology/approach - This conceptual paper proposes a "short list" of reporting items for boards of directors, derived from a theoretical model that examines board of director performance from a group dynamics perspective. Findings - This paper proposes measure for board of director performance reporting that are based upon potential active agency roles. The authors suggest that future dialogue regarding board of director performance reporting might be well served by recognizing the limitations of previous research that has found differing and questionable links between board characteristics and organizational outcomes. Research limitations/implications - The authors suggest that the items derived from the theoretical model for examining board of director performance reporting need to be empirically assessed in terms of their usefulness in a variety of industries and contexts. Practical implications - The authors argue that active agency roles and functional group dynamics should form the backbone of a board of director performance reporting process. Originality/value - This paper extends the board of director performance reporting literature by providing a theoretically grounded rationale for measuring and conceptualizing board effectiveness.