Boardroom independence is not enough

Boardroom independence is not enough
Document type
Article
Author(s)
Barker, Roger
Publisher
Institute of Directors
Date of publication
26 January 2009
Subject(s)
Management & leadership: including strategy, public sector management, operations and production
Collection
Business and management
Material type
Reports

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A report argues that independence of directors is not always effective in ensuring good corporate governance. It is suggested that in many examples of corporate governance failure, non-executive directors failed to exert proper influence as a result of a lack of subject knowledge, rather than a lack of independence. In highly complex and specialised sectors such as financial services and high technology, non-executive directors may be unable to comprehend corporate processes or the true advantages, disadvantages, and risks of corporate decisions, and be unable to properly evaluate the information and arguments provided to them by executive management.

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