The (Neglected) Value of Board Accountability in Corporate Governance
22 Pages Posted: 18 Feb 2015
Date Written: February 17, 2015
The concept of board accountability is central to literature and debates on corporate governance, not least in the United Kingdom and United States. However, as a social phenomenon it is frequently misunderstood, particularly by corporate lawyers. This article identifies two particularly common misunderstandings of the term within a legal context, where it has tended to be viewed (erroneously): first, as a mitigating counter-pressure to directorial decisional authority; and, second, as an inherent structural corollary to shareholder decisional empowerment – or, vice versa – board decisional disempowerment. The article takes issue with both of these perspectives, and – in response – develops a more nuanced alternative understanding of board accountability in corporate governance, derived from sociological and institutional-economic insights into the nature of accountability as a discrete social-relational practice. Essentially, accountability is understood here as the compelled provision by an authorised decision-maker (to her recognised decision-beneficiary) of normatively cognisable reasons in support of her discretionary decisions and/or actions, which has the ultimate effect of legitimising – and, in turn, sustaining – relational power imbalance between private decisional parties. By recognising these broader dimensions of board accountability as a social phenomenon, corporate lawyers – it is submitted – will be better positioned in future to grapple with the full institutional complexity of corporate governance as a subject of legal enquiry.
JEL Classification: G38, K22, N43
Suggested Citation: Suggested Citation