Research Reveals Weaknesses in Board Evaluations & Composition

Inside Americas Boardrooms
David Larcker likes arguments... but he doesn't like to take sides. Instead, he prefers to use research to differentiate fact from rumor and to determine what effective governance looks like.

As a senior faculty member at Stanford University's well-known Arthur & Toni Rembe Rock Center for Corporate Governance, Larcker has tackled many often-debated corporate governance questions over the past 10 years. In this episode, he zeros in on board evaluations and composition.

Most board members today view board evaluations as a check-the-box requirement, which largely fails to open the floor for improvement, says Larcker.

[blockquote source="David Larcker, Senior Faculty at Stanford University's Rock Center for Corporate Governance"]I think it's a lost opportunity. Here we've got a case where you're asking questions about the process of the board. Do we have the right people? I think it's where introspection ought to take place.[/blockquote]

Host TK Kerstetter and Larcker discuss the effectiveness of peer reviews and the importance of having a strong non-executive chair or lead director in order to drive change in a board's composition or behavior. When Kerstetter asks Larcker about the next governance issue on his research agenda, the two dive into a familiar discussion: How can we actually measure corporate governance? Larcker goes on to explain how the Rock Center approaches this age-old question to continually bridge the gap between academic research and the real-world happenings of today's boardrooms.

Click here to view the Rock Center's 2016 Survey: Board of Director Evaluation and Effectiveness.