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Accountability Processes in Boardrooms: A Conceptual Model of Manager-Non-Executive Director Information Asymmetry

Author

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  • Niamh Brennan
  • Collette E. Kirwan
  • John Redmond

Abstract

Purpose: Understanding the influence of information and knowledge exchange and sharing between managers and non-executive directors is important in assessing the dynamic processes of accountability in boardrooms. By analysing information/knowledge at multiple levels, invoking the literature on implicit/tacit and explicit information/knowledge, we show that information asymmetry is a necessary condition for effective boards. We introduce a conceptual model of manager-non-executive director information asymmetry as an outcome of our interpretation of information/knowledge sharing processes amongst board members. Our model provides a more nuanced agenda of the management-board information asymmetry problem to enable a better understanding of the role of different types of information in practice. Design/methodology/approach – Our analysis of information/knowledge exchange, sharing and creation and the resultant conceptual model are based on the following elements: (i) manager-non-executive director information/knowledge, (ii) management-board information/knowledge and (iii) board dynamics and reciprocal processes converting implicit/tacit into explicit information/knowledge. Findings – Our paper provides new insights into the dynamics of information/knowledge exchange, sharing and creation between managers and non-executive directors (individual level)/between management and boards (group level). We characterise this as a two-way process, back-and-forth between managers/executive directors and non-executive directors. The importance of relative/experienced "ignorance" of non-executive directors is revealed, which we term the "information asymmetry paradox". Research implications – We set out key opportunities for developing a research agenda from our model based on prior research of knowledge conversion processes and how these may be applied in a boardroom setting. Practical implications – Our model may assist directors in better understanding their roles and the division of labour between managers and non-executive directors from an information/knowledge perspective. Originality/value – We apply Ikujiro Nonaka’s knowledge conversion framework to consider the transitioning from individual implicit personal to explicit shared information/knowledge, to understand the subtle processes at play in boardrooms influencing information/knowledge exchange, sharing and creation between managers and non-executive directors.

Suggested Citation

  • Niamh Brennan & Collette E. Kirwan & John Redmond, 2016. "Accountability Processes in Boardrooms: A Conceptual Model of Manager-Non-Executive Director Information Asymmetry," Open Access publications 10197/7652, Research Repository, University College Dublin.
    • Handle: RePEc:rru:oapubs:10197/7652
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    File URL: http://hdl.handle.net/10197/7652
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    References listed on IDEAS

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