Board Accountability and the Entity Maximization and Sustainability Approach

Forthcoming, Understanding the Company: Corporate Governance and Theory, edited by Barnali Choudhury and Martin Petrin, Cambridge University Press

17 Pages Posted: 14 Mar 2016

See all articles by Andrew R. Keay

Andrew R. Keay

University of Leeds - School of Law

Date Written: March 14, 2016

Abstract

Accountability operates expressly and implicitly in the field of corporate governance to the point where it is regarded as one of its most critical elements. The accountability of the board of directors is an important part of the accountability element of corporate governance and it has been said that good corporate governance is able to be best achieved by holding directors accountable for their behaviour and decisions. This paper examines how board accountability would work if an entity maximisation and sustainability approach to the company was taken. In essence this approach takes the view that the ultimate objective of the company should be that the overall long-run market value of the company as a whole is increased, taking into account the investment made by various people and groups, and that the company will be managed so that it has long-term survival. The paper focuses particularly on the following question: to whom is the board accountable?

Keywords: accountability, boards, entity maximisation, directors

JEL Classification: K22, L21

Suggested Citation

Keay, Andrew R., Board Accountability and the Entity Maximization and Sustainability Approach (March 14, 2016). Forthcoming, Understanding the Company: Corporate Governance and Theory, edited by Barnali Choudhury and Martin Petrin, Cambridge University Press, Available at SSRN: https://ssrn.com/abstract=2747398

Andrew R. Keay (Contact Author)

University of Leeds - School of Law ( email )

Corporate and Commercial Law
Leeds LS2 9JT
United Kingdom
0113-343-6389 (Phone)

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