Research Notes: Board Composition and the Commission of Illegal Acts: An Investigation of Fortune 500 Companies

Abstract

In this article the authors discuss research they conducted on corporate boardrooms. They were interested in examining how effective boards of directors that were comprised of outsiders were. They note that prior research had indicated that various design structures had the effect of restricting the independence of board members, making the board ineffective. Their hypothesis centered on the notion that the existence of outsiders on boards increases the board's knowledge base, experience and the overall effectiveness of the organization. The authors also discuss some of the drawbacks of unitary leadership designs, noting that management is often placed in an awkward position where criticism does not feel welcomed.