Board to Death: How Busy Directors Could Cause the Next Financial Crisis

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2017-07-17

Posted by Jeremy Kress, University of Michigan, on Monday, July 17, 2017
Editor's Note: Jeremy Kress is a Senior Research Fellow at the University of Michigan Center on Finance, Law, and Policy and an Assistant Professor of Business Law at the University of Michigan Ross School of Business (effective Fall 2018). This post is based on his recent paper.

By any measure, corporate directors lead exceptionally busy lives. Many directors hold full-time executive positions, and most serve on the board of at least one other company. Academics and policymakers debate whether directors’ outside professional commitments enhance or detract from their governance abilities. Directors, on one hand, might acquire valuable knowledge and practice by serving in governance capacities at other firms. On the other hand, however, busy directors might lack time to carefully review reports, assess strategy and risk, and attend board and committee meetings for all of the companies with which they are affiliated.