The Independent Director: Heavenly City or Potemkin Village?

Brudney, Victor

doi:10.2307/1340594

Cited by 99 publications

(25 citation statements)

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“…According to agency theorists, effective boards independently monitor strategic challenges facing a firm and evaluate management's performance in addressing them (Beatty & Zajac, 1994;Fama & Jensen, 1983). Directors may overturn poor decisions or replace "underperforming" managers as a result of such monitoring (Brudney, 1982). Moreover, agency theory also suggests that directors are motivated to engage in competent monitoring activity by the reputational effects of poor decisions (Fama, 1980).…”

mentioning

confidence: 99%

The Strategic Context of External Network Ties: Examining the Impact of Director Appointments on Board Involvement in Strategic Decision Making

Carpenter,

Westphal

2001

AMJ

386

410

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This study examines how external network ties determine a board's ability to contribute to the strategic decision making process. Although the simple number of director appointments to other boards does not affect board monitoring or advice on strategy, appointments that can provide directors with relevant strategic knowledge and perspective do predict such involvement. In effect, the strategic context of social network ties, not simply the number of ties, is an important influence on corporate governance.

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mentioning

confidence: 99%

The Strategic Context of External Network Ties: Examining the Impact of Director Appointments on Board Involvement in Strategic Decision Making

Carpenter,

Westphal

2001

AMJ

386

410

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“…Their non-executive directors hold responsibilities, and face conflicts, similar to those of directors of listed companies, related to the setting of organizational objectives, monitoring of performance, scrutiny of financial reports, and the supervision of executive management (Brudney, 1982;Fama and Jensen, 1983;Daily et al, 1996;Ezzamel and Watson, 1997;Hermalin and Weisbach, 1998;Higgs, 2003;Brennan, 2006). These responsibilities are set in an environment of 6 multiple stakeholders with frequently opposing agendas and demands, which sharpens and complicates the contrast between a traditional sector focus on service provision and the need to manage short and long-term financial commitments (Collier, 2005;Mullins, 2010).…”

Section: Context Of the Studymentioning

confidence: 99%

“…Additional funds are provided through private financial market loans, with lenders typically requiring a 30-year business plan outlining projected income and expenditure streams to ensure that cash flows cover the principal and interest payments (TSA, 2012;Community Housing, 2011 Social housing in the UK is subject to a high level of regulation and periodic audit/inspection, and mandatory financial reporting requirements are met through a system of formal accounting and external audit, as one component of accountability (Collier, 2005;TSA, 2012;Community Housing, 2011 (Brudney, 1982;Fama and Jensen, 1983;Daily et al, 1996;Ezzamel and Watson, 1997;Hermalin and Weisbach, 1998;Higgs, 2003;Brennan, 2006). These responsibilities are set in an environment of multiple stakeholders with frequently opposing agendas and demands, which sharpens and complicates the contrast between a traditional sector focus on service provision and the need to manage short and long-term financial commitments (Collier, 2005;Mullins, 2010).…”

Section: Cadbury Code Of Best Practicementioning

confidence: 99%

Explaining governance failure: accountability spaces in-between and bias

Marnet

2014

IJCA

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The paper is based on a two-year participant observer study of the governance failures in a UK housing association that experienced significant adverse performance resulting in its near collapse. Concerned with the accountability of boards of directors, the study extends research by Roberts (1991Roberts ( , 1996Roberts ( , 2001) who distinguishes between formal and informal forms of accountability, and Collier (2005) who identifies accountability spaces in-between where governance may be lost. The present research builds on this discussion by introducing socio-psychological factors underlying a reluctance of boards to adequately explore governance issues hidden in these spaces. As informal reporting systems are increasingly important drivers of the control role of boards (Parker, 2008), the paper emphasizes the need for boards to adopt procedures aimed at mitigating the effects of bias on the quality of board decision-making.Keywords: Quasi-public sector; governance; accountability; boardroom decisionmaking; bias mitigation; new public management;. 2 IntroductionThe paper explores limitations of formal, accounting-based systems of accountability and inadequacies of informal, sense-making narrative systems (Roberts, 1991(Roberts, , 1996(Roberts, , 2001Collier, 2005). The sense-making narrative terminology builds on the contrast made by Roberts (1991) between a formal, hierarchical system of accountability based on calculative accounting, and an informal, socialising form, which in boardroom discussions increasingly replaces the focus on the technical and rulebased (Parker, 2008). Hidden between the two systems, Collier (2005) identifies accountability spaces in-between where neither the formal nor the informal ensures that issues important to the organization are sufficiently explored and where governance can be neglected and lost. The present research inquires into sociopsychological causes for the reluctance of boards to investigate these spaces. The paper suggests that cognitive bias in judgment frequently inhibits an adequate articulation and exploration of issues critical to the governance of organizations, thereby undermining the value of the narrative form of accountability (Langevoort, 2001a,b;Prentice, 2003;Bazerman and Malhotra, 2006;Forbes and Watson, 2010;FRC, 2011; APB, 2012).With the rise of New Public Management (NPM) and the subsequent increase in the use of performance measurement in the quasi-public sector (Collier, 2005;Bogt and Scapens, 2012), a discussion on bias in the boardroom provides useful insights on potential problems and dysfunctional consequences of the adoption of this model in the public sector (see, e.g., Hood, 2007;McLean et al., 2007;Broadbent and Guthrie, 2008;Lapsley, 2008). New Public Management, although changing over time and from country to country, stresses the use of explicit quantitative performance 3 measures and external audits, output controls, and private sector management methods to advance public sector performance and accountability (Hood, 1995(Hood, ,...

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“…According to such considerations, some studies have also suggested that independent directors should be full-time experts paid by investors to serve on more boards (Gilson & Kraakman, 1991), assisted by their own staff particularly in the activity of collecting and evaluating corporate information (Brudney, 1982).…”

Section: Literature Review Independent Board Membersmentioning

confidence: 99%

Board Independence and Internal Committees in the BRICs

2013

CBR

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The Independent Director: Heavenly City or Potemkin Village?

Cited by 99 publications

References 0 publications

The Strategic Context of External Network Ties: Examining the Impact of Director Appointments on Board Involvement in Strategic Decision Making

The Strategic Context of External Network Ties: Examining the Impact of Director Appointments on Board Involvement in Strategic Decision Making

Explaining governance failure: accountability spaces in-between and bias

Board Independence and Internal Committees in the BRICs

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