Chapter

Director Independence

Stephen M. Bainbridge

in Corporate Governance after the Financial Crisis

Published in print January 2012 | ISBN: 9780199772421
Published online May 2012 | e-ISBN: 9780199932696 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199772421.003.0004
Director Independence

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With few exceptions, all public corporations in the United States are now required to have a majority of independent directors. The logic of this requirement is that independent directors will do a better job of monitoring management than would insiders and others who are dependent on the goodwill of the CEO and top management. This chapter argues that independence has become a fetish—i.e., an idea eliciting unquestioning reverence, respect, and devotion. Director independence is not a panacea for the ills of corporate governance and, at least in some settings, is undesirable.

Keywords: corporate governance; public corporations; board of directors; independent directors

Chapter.  12855 words. 

Subjects: Company and Commercial Law

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