Directors’ responsibilities and participation in the strategic decision making process

Abstract

The purpose of the article is to discuss the role of the boards of directors in the corporate governance process. The article argues that directors need to be more actively involved in the strategic decision making process of the corporation. Passive directors and inside directors do not have the incentive to insure that corporate governance policies are followed. Prior cases were reviewed and current topical information is included. Current corporate governance issues are discussed. The lack of board involvement is addressed. The results of the research include litigation statistics and a comparison of “older versus new” corporations directors’ involvement in the strategic decision making process. The article concludes that directors need to be actively involved in the affairs of their corporations to insure corporate governance compliance. The article recommends that corporations have a majority of outside directors that do not have conflicts of interest and who are involved in the corporation.