Inside the 'black box': the performance of boards of directors of unlisted companies

摘要

Purpose - The purpose of this paper is to explore two under-developed areas of board research: therncorporate governance of unlisted companies; and board behaviour, focusing on process factors thatrncontribute to a board performing effectively.rnDesign/methodology/approach - The Board Effectiveness Questionnaire was completed by 67rndirectors, to gather views on how their board currently operates and how they think it should operate,rnacross various behavioural areas relating to the relationships, decision making, the working climate andrnpredispositions. Analysis of "process losses", the pattern of sub-optimal board behaviour, allowed therntesting of four hypotheses concerning board effectiveness.rnFindings - The 18 most important and five least important behaviours were identified, plus 12 showingrnthegreatest "process loss". Quality of team "relationships" is the main cause of loss whereas evidencernfor the impact of leadership style is mixed. Size of the board is related to overall performance of thernboard but number and proportion of non-executive directors are not.rnResearch limitations/implications - This is a "purposive, judgmental" sample of all unlistedrncompanies, derived from those who were willing and able to respond. Only one director's view of eachrnboard was sought.rnPractical implications - The picture of the "ideal'' board provides a checklist for a company wishing tornassess its board's performance as a working group, highlighting key characteristics that should bernreflected on when discussing director/ board performance. The gaps in board behaviour identifiedrncould help other boards assess their own performance and researchers to focus on these areas.rnOriginality/value - The paper explores two under-researched areas.