When board members speak freely organisations make better decisions

📅 Published: August 16, 2025

📰 Source: theindependent

Curated by AllZimNews.com

Let’s look at some of the issues.

In the wake of every major corporate scandal, from Enron to Lehman Brothers, a familiar post-mortem unfolds.

Regulators, investors, and academics scrutinise the company’s corporate governance, searching for structural flaws that include the missing committee, the combined CEO/chair role, and the lack of independent directors, which allowed disaster to strike.

This focus has driven decades of governance reform, codifying best practices into exchange listing requirements and national laws.

Yet, a persistent paradox remains: many of the most spectacular corporate failures occurred at companies whose boards, on paper, looked impeccable.

Conversely, many highly-successful enterprises are governed by boards with identical structures.

This raises a fundamental question: if the formal architecture of governance does not reliably separate success from failure, what does?

The answer lies not in the static, observable structures of a board, but in its dynamic, unwritten culture.

A vast body of academic research examining the relationship between board structure and firm performance has produced overwhelmingly “equivocal findings”.

Studies analysing variables such as board size, for instance, have found positive, negative, and neutral correlations with financial returns, depending on the specific company and market context.

Similarly, multiple meta-analyses that aggregate the results of dozens of individual studies have concluded that the correlation between the proportion of independent directors on a board and the company’s financial performance is near zero, or at best, very weak but positive. 🔗

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