Improve board effectiveness: The need for incentives

Research output: Contribution to journalArticle

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Abstract

Roberts, McNulty and Stiles (2005) focus on the attitudes and behaviours of non-executive directors in their recommendations for improving board effectiveness. This paper addresses the importance of providing incentives for non-executives in order to improve board effectiveness. It first points out that the current norms and practices in corporate governance suggest that, without strong incentives, non-executive directors are unlikely to become engaged in corporate governance, to challenge executive decision, and to remain independent of executive influences. It then proposes that, for non-executive directors to develop the attitudes and behaviors recommended by Roberts, McNulty and Stiles, it is important to require them own a significant amount of company stocks over a long period of time. It also addresses some concerns regarding the use of stock ownership to improve the effectiveness of non-executive directors in corporate governance.

Original languageEnglish (US)
Pages (from-to)S81-S89
JournalBritish Journal of Management
Volume16
Issue numberSPEC. ISS.
DOIs
StatePublished - Mar 1 2005
Externally publishedYes

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ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Strategy and Management
  • Management of Technology and Innovation

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