Corporate Governance in an International Context

Corporate Governance in an International Context

Boards of directors are at the apex of organisations’ decision-making structures (Fama & Jensen, 1983), and are generally considered to be the most important internal governance mechanism. However, several corporate scandals and the recent financial crisis have re-ignited a debate on the role of boards and their effectiveness.
Your task is to review the theoretical and empirical literature on boards, focusing specifically on the concept of board independence. Your report should include the following:
a) An introduction to the domain of corporate governance and within it the role of boards.
b) A critical review of the concept of board independence and its theoretical derivation.
c) A review of the empirical literature on board independence, including a summary of findings regarding the impact of board independence on firm performance.
d) A conclusion in which you put forward recommendations on how board independence can be achieved.

Boards of directors are at the apex of organisations’ decision-making structures (Fama & Jensen, 1983), and are generally considered to be the most important internal governance mechanism. However, several corporate scandals and the recent financial crisis have re-ignited a debate on the role of boards and their effectiveness.
Your task is to review the theoretical and empirical literature on boards, focusing specifically on the concept of board independence. Your report should include the following:
a)    An introduction to the domain of corporate governance and within it the role of boards.
b)    A  critical review of the concept of board independence and its theoretical derivation.
A review of the empirical literature on board independence, including a summary of findings regarding the impact of board independence on firm performance.

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