Business Ethics and Corporate Governance, Second Edition

EFFECTIVENESS OF THE BOARD OF DIRECTORS

Though the board is recognized legally as the top layer of management with the responsibility of governing the enterprise, yet, in actual practice, the board of directors delegates most of its managerial power to chief executives—say, the managing director or manager. In many cases, the board appoints many committees and clothes them with its power. The most common is the executive committee though there may be other committees connected with various phases of management. However, these committees cannot make radical changes in the policy of the company. In recent years, the board of directors has come to rely more and more on the chief executives for the management of the company. The chief executives, ...