Boards That Deliver: Advancing Corporate Governance From Compliance to Competitive Advantage

Appendix B: The Research Agenda

For as long as the stock market has existed, researchers have tried to unravel it by making correlations with everything from complex combinations of economic variables to the length of women’s hemlines and who wins the Super Bowl. When cause-and-effect is conspicuously missing, the theories can be quite humorous. Does anyone really believe that miniskirts cause a bull market? The point is that making a statistical correlation is very different from proving cause and effect.

Unfortunately, most academic research on corporate governance is based on statistical correlations, not on causal relationships. The researchers are intellectually honest, and they often point out that their conclusions are tentative and that ...