Where Experts Get It Wrong: Independence vs. Leadership in Corporate Governance

Over the last few decades, researchers have taken a thorough and critical look at corporate governance from various perspectives. For the most part, they have found that structural features of corporate governance have little or no relation to governance quality. For example, there is no evidence that having an independent chairman benefits companies. At the same time, there is evidence that CEOs with different personalities require different levels of oversight. We examine this issue in greater detail. We ask: Why isn't more attention paid to contextual considerations in corporate governance? Why don't governance experts base their recommendations on research rather than subjective opinion? How can corporate stakeholders take into account the quality of a company's leadership to design more effective governance systems? Topics, Issues and Controversies in Corporate Governance and Leadership: The Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the book Corporate Governance Matters, and A Real Look at Real World Corporate Governance.