What Corporate-Governance Reforms Are Still Necessary?

Board Independence: Directors must become independent overseers of management

The next needed level of corporate-governance reform is a continuation of an existing trend: changing the boardroom culture so that directors will be effective as independent overseers of management on all issues, not only in times of crisis at their companies. This reform must come neither from the government nor the stock exchange, but as a development of boards themselves.

The hurdles that must be overcome involve getting directors to better understand and focus on business, governance, and legal issues, and to openly express their views on issues without fear of being criticized—and even ostracized—by their peers or the CEO.

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