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Board Evaluations: making a fit between the purpose and the system

Minichilli, Alessandro; Gabrielsson, Jonas LU and Huse, Morten (2007) In Corporate Governance: An International Review 15(4). p.609-622
Abstract
Board evaluations can contribute to effective boards and improved corporate financial performance. The increasing interest in the practice of board evaluations, however, calls for a more systematic and careful approach than has been employed in the past. While most attention has primarily been focused on the content of board evaluations, this article outlines the features of various possible board evaluation systems. Based on state-of-the-art research on boards and governance, we contend that a comprehensive board evaluation system needs to include decisions about: (a) the agent who evaluates the board; (b) the content, or what the evaluation should deal with; (c) the addressee and other stakeholders for whom the board is evaluated; and... (More)
Board evaluations can contribute to effective boards and improved corporate financial performance. The increasing interest in the practice of board evaluations, however, calls for a more systematic and careful approach than has been employed in the past. While most attention has primarily been focused on the content of board evaluations, this article outlines the features of various possible board evaluation systems. Based on state-of-the-art research on boards and governance, we contend that a comprehensive board evaluation system needs to include decisions about: (a) the agent who evaluates the board; (b) the content, or what the evaluation should deal with; (c) the addressee and other stakeholders for whom the board is evaluated; and (d) how the board is evaluated. These key decisions should not be seen as independent of each other as they have consequences for the kind of system that will be adopted. Following this argument, we present four different board evaluation systems: (i) board-to-board, (ii) board-to-market, (iii) market-to-board and (iv) market-to-market. The key message we communicate in this article is that there must be a fit between the purpose and the system of board evaluations. There is no universal or "one best way" to evaluate boards of directors. Board evaluations will not meet their purpose unless there is a fit between the agents, the addressees, the content and the modalities of the evaluation. It is important to know who is doing what for whom and how. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
evaluation of the board, corporate governance rating/index, Board of directors
in
Corporate Governance: An International Review
volume
15
issue
4
pages
609 - 622
publisher
Wiley-Blackwell
external identifiers
  • scopus:34547277573
language
English
LU publication?
yes
id
973d01d5-9fb6-4d31-8948-346eb064b0b9 (old id 942015)
date added to LUP
2008-01-30 10:29:52
date last changed
2017-06-25 04:42:45
@article{973d01d5-9fb6-4d31-8948-346eb064b0b9,
  abstract     = {Board evaluations can contribute to effective boards and improved corporate financial performance. The increasing interest in the practice of board evaluations, however, calls for a more systematic and careful approach than has been employed in the past. While most attention has primarily been focused on the content of board evaluations, this article outlines the features of various possible board evaluation systems. Based on state-of-the-art research on boards and governance, we contend that a comprehensive board evaluation system needs to include decisions about: (a) the agent who evaluates the board; (b) the content, or what the evaluation should deal with; (c) the addressee and other stakeholders for whom the board is evaluated; and (d) how the board is evaluated. These key decisions should not be seen as independent of each other as they have consequences for the kind of system that will be adopted. Following this argument, we present four different board evaluation systems: (i) board-to-board, (ii) board-to-market, (iii) market-to-board and (iv) market-to-market. The key message we communicate in this article is that there must be a fit between the purpose and the system of board evaluations. There is no universal or "one best way" to evaluate boards of directors. Board evaluations will not meet their purpose unless there is a fit between the agents, the addressees, the content and the modalities of the evaluation. It is important to know who is doing what for whom and how.},
  author       = {Minichilli, Alessandro and Gabrielsson, Jonas and Huse, Morten},
  keyword      = {evaluation of the board,corporate governance rating/index,Board of directors},
  language     = {eng},
  number       = {4},
  pages        = {609--622},
  publisher    = {Wiley-Blackwell},
  series       = {Corporate Governance: An International Review},
  title        = {Board Evaluations: making a fit between the purpose and the system},
  volume       = {15},
  year         = {2007},
}