August 08, 2011
Should we eliminate corporate boards?
Posted by Lisa Fairfax

Kelli Alces has an intriguing article coming out soon arguing that boards of large public corporations have become ineffective, and proposing that they be eliminated.  Given the breadth of such a proposal, the article is characterized as the first step on a path towards the gradual abolition of boards.  The article caught my eye not only because, as it notes, while most scholars debate the merits of boards, there is a general presumption that boards are critical to our corporate governance system, but also because, as the article suggests, regulations increasingly rely on boards to--in effect--perform miracles.  Indeed, it seems after every crisis, regulations heap more and more responsibility on independent directors to monitor and in some cases manager the often complex and widespread affairs of large public corporations.   As the article notes, this means we place an inordinate amount of responsibility for such corporations in the hands of a group of 10-12 people who are not full time employees of the company, and who rely heavily on others for almost all of their information, which raises questions about whether even the most well-intentioned director can fulfill her responsibilities.   In that regard, I like the effort to think "Beyond the Board"--which is the title of the article.  The article's introduction begins with a statement, that could also be viewed as a question, "has the board outlived its purpose?" Since I'm sure I have not done justice to the article, particularly its proposal, you should check it out.

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