The conventional wisdom couldn’t be clearer: The more independent a company’s board is, the better. The presence of any company employees, other than perhaps the company’s CEO, can only bring trouble.
The conventional wisdom couldn’t be more wrong: Boards that are too independent invite trouble. According to our research, it can lead to lower profits, excessive CEO pay and more financial fraud.
In other words, when it comes to the independence of corporate boards, there can be too much of a good thing.
Dr. Combs, the Dr. Phillips Chair in American free enterprise at the University of Central Florida, and Dr. Ketchen, Lowder eminent scholar at Auburn University, can be reached at firstname.lastname@example.org. Also contributing to this article: Michelle L. Zorn, an assistant professor of management at Auburn University; Christine Shropshire, an associate professor of management at Arizona State University; and John A. Martin, an assistant professor of management at Wright State University.
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