Boardroom’s independence and corporate performance: the ever-elusive conundrum
Abstract
Purpose
The purpose of this paper is to unravel the root causes as to why the boardroom independence–corporate performance linkage remains an elusive conundrum in the academic literature, and to propose practical recommendations for future research endeavors.
Design/methodology/approach
The probing of the underlying issues is made via an extensive review of the existing literature. A thoughtful analysis is conducted from a multi-disciplinary perspective by soliciting feedback from academics with corporate governance expertise in finance, accounting, economy, strategy, management and organizational behavior.
Findings
The lack of consensus on the economic value of an independent boardroom is attributed to three reasons. The first reason is ontological complexities inherent to the very nature of the corporation. The second reason is methodological complexities intrinsic to normative research with large archival data. The third reason is self-serving behavioral motive that cannot be factored in archival data.
Research limitations/implications
The infusion of complementary methodologies to the existing empirical dogmatism would provide the framework for a better understanding of corporate governance challenges and opportunities, particularly as it relates to making causal inferences on boardroom independence and corporate performance.
Practical implications
New insights on boardroom independence would directly influence corporate practices.
Social implications
The determination as to what constitutes optimum boardroom configuration has emerged as an issue of considerable importance to shareholders, policymakers and other stakeholders.
Originality/value
Virtually no studies have been conducted in a comprehensive and systematic manner addressing the fundamental question as to why research pertaining to boardroom independence–corporate performance has not yielded unequivocal results in the relevant academic literature, thus the originality and value of this research.
Keywords
Citation
Rebeiz, K.S. (2015), "Boardroom’s independence and corporate performance: the ever-elusive conundrum", Corporate Governance, Vol. 15 No. 5, pp. 747-758. https://doi.org/10.1108/CG-07-2015-0096
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited