Corporate boards in the United States have recently been on the hot seat. Stimulated by high-profile scandals, investor dissatisfaction with board performance and questions about the level of executive compensation, regulators have introduced significant reforms in the rules that govern boards. But will such reforms actually contribute to the effectiveness of boards? A real danger exists that the mandated changes not only will fail to enhance how companies are governed but also could possibly lead to a number of negative unintended consequences.
To investigate such issues, the authors conducted a study that compared the board practices and effectiveness of Fortune 1000 companies in 1998 versus 2003. They looked specifically at three areas: board leadership, the conditions governing board membership, and the performance evaluations of boards, individual board members and CEOs. The results have helped to determine which practices in those three areas are actually related to overall board performance.
Edward E. Lawler III is the director of the Center for Effective Organizations and Distinguished Professor of Business with the Marshall School of Business at the University of Southern California. David A. Finegold is an associate professor in strategy and organization studies at the Keck Graduate Institute. They, along with Jay A. Conger, are the authors of Corporate Boards: Strategies for Adding Value at the Top (Jossey-Bass, 2001). They can be reached at elawler@marshall.usc.edu and david_finegold@kgi.edu.
Copyright © Massachusetts Institute of Technology, 1977-2008. All rights reserved.
Buy this article
Buy PDF 
