It's time to rethink the independent board.

Author:Kristie, James
Position:LEADERSHIP - Reprint

From Winning Investors Over by Baruch Lev. Copyright [c]2012 by Harvard Business School Publishing Corp. Published by Harvard Business Review Press (

INDEPENDENT DIRECTORS are on corporate boards to create value for shareholders or prevent value destruction by monitoring and advising managers on tactical and strategic issues. And how successful are independent directors in this mission? The evidence will disappoint the legions of pundits and governance advocates pushing for ever more independence on the board: there is hardly any relation between the increased presence of independent directors and shareholder value.

How can this be; It's elementary. Being independent is no guarantee for business acumen, diligence, and courage to stand for one's principles. If you doubt that, just think of the dismal performance of the scores of independent directors on the boards of Bear Stearns, Lehman Brothers, AIG, Merrill Lynch, Citigroup, Bank of America, and the smaller financial services firms that have gone bust or required...

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