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University of Cincinnati College of Law




What makes for a well-functioning corporate board? In this Article I argue that one important condition is that board members must understand and agree upon the group's objectives and its roles. If a corporate board of directors (Board) does not agree on what it is supposed to do; or, worse still, if Board members disagree about the Board's mission and its implementation, then the Board is likely to become dysfunctional-inefficient and ineffective. The Board's missions, however, may be mixed and their forms of implementation may conflict. In this case, the balance between the two missions must be established, and it is that balance on which Board members must agree and follow. This Article examines the Board's two roles: One is the Board's role as advisors to Chief Executive Officers and corporate management (CEOs); the other is the Board's role as supervisors of CEOs. This Article discusses the many ways in which the two roles differ and the balance that must be achieved between them to create a functional Board.1 Understanding the balance between the Board's roles depends on the corporation's history, present condition, its business, and the personality of the actors. These factors are manifested by the Board's culture, that is, the implicit assumptions that Board members make in their interactions with each other and with the other actors in the corporation. These assumptions are neither specified nor debated, nor clarified, except in times of crises. Usually such assumptions are taken for granted, just as we assume in this country that businesspersons do not hire assassins to eliminate their competitors. This Article suggests that Board efficiency varies, depending on the extent to which their members understand and agree on the dual roles they should play as advisors and supervisors of their CEOs, and the appropriate balance between these roles. In addition, Boards must trust * Professor of Law, Michaels Faculty Research Scholar, Boston University Law School.



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