The (Neglected) Value of Board Accountability in Corporate Governance

22 Pages Posted: 18 Feb 2015

See all articles by Marc T. Moore

Marc T. Moore

University College London, Faculty of Laws

Date Written: February 17, 2015

Abstract

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

Moore, Marc T., The (Neglected) Value of Board Accountability in Corporate Governance (February 17, 2015). University of Cambridge Faculty of Law Research Paper No. 9/2015, Available at SSRN: https://ssrn.com/abstract=2566335 or http://dx.doi.org/10.2139/ssrn.2566335

Marc T. Moore (Contact Author)

University College London, Faculty of Laws ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

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