What makes an individual an effective director of a Fortune 500 company? Is it skills, experience, and connections? Or is it outside allegiances that pull a director one way or another? Are women better at it than men? Do executives from other companies have an edge?
A group of researchers from the W. P. Carey School of Business, Indiana University, and Texas A&M University sought answers to these and related questions through an exhaustive and detailed analysis of the voting records of shareholders of major U.S. corporations. The team studied the results of elections of over 2,000 Fortune 500 directors in 2006 and developed insights into ways to promote effective corporate governance. The findings also shed light on the two major academic theories used by researchers in the field.
This project was not simply an academic exercise. Corporate responsibility, director accountability, and shareholder activism have been major issues for business, finance, and government since the Enron, WorldCom, and other scandals broke about five years ago.
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