Evaluating the Effectiveness of Corporate Boards

Abstract

Purpose – This paper examines how board evaluations have emerged as an important tool in public policy and corporate practice for enhancing board effectiveness.

Design/methodology/approach – We review the extensive literature on effectiveness and the emerging literature on board evaluation to identify ways to assess the current policy direction for external evaluation of corporate boards.

Findings – The paper develops an integrated framework of effectiveness that can be used as a tool for board evaluation, in particular for externally facilitated exercises.

Research limitations/implications – Through its integration of prior conceptual work this paper advances our theoretical understanding of this emerging part of policy and practice, with to-date lack much empirical basis.

Practical implications – The framework we develop shows ways to focus how the practice is conducted by boards and external evaluators alike.

Social implications – It can also help policy formation by pointing out the limitations as well as benefits of various policy options.

Originality/value – In pointing to ways to develop study of the field through empirical research it provides direction for future academic research. It also identifies a need for and direction toward the professionalization of practice.

Keywords: Board evaluation, board effectiveness, corporate governance, directors

JEL Classification: M1, M48, G30, G34