The Trouble With Too Much Board Oversight

New research suggests that the most favorable conditions for innovation occur when boards do not monitor the CEO intensely but focus on strategic advising.

OLUBUNMI FALEYE, RANI HOITASH AND UDI HOITASH

THE HIGH-PROFILE SCANDALS of the late 1990s have transformed the corporate governance landscape. One of the most notable effects has been increased oversight duties of independent directors. For example, in the United States, under the Sarbanes-Oxley Act of 2002, a public company’s audit committee is now responsible for appointing, compensating and overseeing the work of the external auditors as well as maintaining procedures for whistle-blower protection. The committee itself must be made up entirely ...