The board of director’s role in the modern business focuses on monitoring management (Booth et al., 2001). The advantage of monitoring management relates to divergence of incentives among shareholders and managers. Booth et al. (2001) contend that board of directors must be independent for effective monitoring to take place. There are two measures of independence that serve as the focus for the reforms of the company’s board of directors. These include the number of outside directors having a position on the board and whether chief executive officer likewise serves as the chairman of the board (Booth et Continue reading...
