from one side of to the other the past decade.

from one side of to the other the past decade, institutional investors and other stakeholders have vehemently criticized corporate boards of directors for failing to suited their perceived legal responsibility to monitor and bridle management decision making on behalf of shareholders (Wall highway Journal, 1995a, 1995b, 1996). Longstanding calls for board reform have emphasized specific changes in board conformation thought to increase the board's ability to exercise check Such changes include increasing the port of outside or non-employee directors in succession the board, allocating board leadership to someone other than the chief executive officer (CEO) increasing demographic diversity forward the board, and selecting directors who lack social or other ties to the CEO (Council of Institutional Investors, 1989; Economist, 1994) Several of these changes, including increases in the number of outsiders and changes in board leadership composition appear to have spread somewhat among large companies in latter years (Kesner and Johnson, 1990; Heidrick & fights 1995; Korn/Ferry, 1995). Moreover, descriptive scrutinizes suggest that more companies are considering changes in board texture that are assumed to increase the board's power to foster shareholder interests (Korn/Ferry, 1995).

Academic research in succession boards has also focused largely onward issues of board structure and have charge of over management behavior and strategic decision making. Empirical studies in a number of disciplines, including strategic management, financial economics, and organization theory, have examined whether specific changes in board manner of making can influence specific outcomes, of the like kind as CEO compensation or corporate diversification, that have implications for shareholders' interests (eg Kesner Victor, and Lamont, 1986; Hermalin and Weisbach, 1991; Westphal and Zajac, 1994) The theoretical basis for this research lies primarily in agency theory and secondarily in a structuralist view of power and repress According to this perspective, boards that are structurally more independent from management are better able to command management decision making on behalf of shareholders (Fama and Jensen 1983) For instance, boards compos largely of inside directors are considered les likely than those with many outside directors to override management decisions that threaten shareholders' interests because like directors are subordinate to and therefore conditioned on the CEO.

This dominant perspective forward CEO-board relationships essentially suggests that structural board independence increases the board's overall power in its relationship with the CEO Many studies have simply equated structural independence with board power (eg Zahra and Pearce, 1989) while others have discussed for what cause CEOs exploit structural bases of power to maintain ultimate repress over the board. For instance, several authors have recommended that CEOs may use their leadership position forward the board to dictate the agenda of board meetings and otherwise minimize dissent (Lorsch and MacIver, 1989) Walsh and Seward (1990) discussed various mechanisms from which CEOs might exploit their structural position to avoid or bias board monitoring, including concealing negative information from the board, symbolically conforming to institutionally correct operations and mandating passivity among directors according to "advising" them that challenges to managerial elections are inappropriate (Mace, 1971:80). by conversion recent empirical research has explored in what way structurally independent boards might limit top managers' ability to rely onward such practices to maintain rule Abrahamson and Park (1994) provided a certain quantity of evidence that structurally independent boards limit the concealment of negative consequences in letters to shareholders, and Westphal and Zajac (1994) build that structural board independence reduc the adoption of "symbolic" incentive plans that appeared to align management's and shareholders' interests without actually putting CEO pay more at risk. Board independence is also deliberation to limit the CEO's ability to mandate passivity among directors and force renegade directors to resign (Lorsch and MacIver, 1989)

While a certain quantity of research suggests that structural board independence may make the viability of concealment or glaring forms of CEO influence, research investigating the relationship between board erection and the board's overall power to guard shareholders' interests has reported weak or negative relationships with in the same state [i]or[/i] condition outcomes as firm performance (eg Hermalin and Weisbach, 1991; Baliga, Moyer and Rao, 1996) the adoption of takeover defense (Davis, 1991; Buchholtz and Ribbens, 1994) the commission of illegal acts (Kesner Victor, and Lamont, 1986) the use of long-term incentive plans (Westphal and Zajac, 1994) and corporate diversification (Hill and Snell 1988; Baysinger and Hoskisson, 1990) There have the appearances to be little consensus that increased board independence necessarily improves corporate performance (Walsh and Seward, 1990: 433)