Publication: Reform Realism and the Boardroom
Date
2007-01
ISSN
Published
2007-01
Author(s)
World Bank
Abstract
The board of a 21st century corporation
has the imperative to navigate the shoals of regulatory
landmines without making a shipwreck of its entrepreneurial
energy and strategic thrusts, aptly summarizing one major
challenge for directors. Having in place effective corporate
governance best practices and training directors to
understand their duties are essential steps in improving the
sustainability of companies. One principle is that a board
can delegate, but it cannot abdicate its responsibilities.
This speaks to the fundamental division between the
board's role, that of strategic direction, and
management's duty of executing the board's
strategy. The board must monitor management's
performance, even though it does not directly carry out the
actions. As Koh notes, courts have rejected the argument
that a lower standard of care should apply to non-executive
directors than to executive directors.
Citation
“World Bank. 2007. Reform Realism and the Boardroom. Private Sector Opinion; No. 6. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/da64f2fc-2fa1-5ec4-a7e9-8f651b3a4138 License: CC BY-NC-ND 3.0 IGO.”