The (Neglected) Value of Board Accountability in Corporate Governance

22 Pages Posted: 18 Feb 2015

See all articles by Marc T. Moore

Marc T. Moore

University College London, Faculty of Laws; University College London, Faculty of Laws

Date Written: February 17, 2015

Abstract

The concept of board accountability is central to literature and debates on corporate governance, not least in the United Kingdom and United States. However, as a social phenomenon it is frequently misunderstood, particularly by corporate lawyers. This article identifies two particularly common misunderstandings of the term within a legal context, where it has tended to be viewed (erroneously): first, as a mitigating counter-pressure to directorial decisional authority; and, second, as an inherent structural corollary to shareholder decisional empowerment – or, vice versa – board decisional disempowerment. The article takes issue with both of these perspectives, and – in response – develops a more nuanced alternative understanding of board accountability in corporate governance, derived from sociological and institutional-economic insights into the nature of accountability as a discrete social-relational practice. Essentially, accountability is understood here as the compelled provision by an authorised decision-maker (to her recognised decision-beneficiary) of normatively cognisable reasons in support of her discretionary decisions and/or actions, which has the ultimate effect of legitimising – and, in turn, sustaining – relational power imbalance between private decisional parties. By recognising these broader dimensions of board accountability as a social phenomenon, corporate lawyers – it is submitted – will be better positioned in future to grapple with the full institutional complexity of corporate governance as a subject of legal enquiry.

JEL Classification: G38, K22, N43

Suggested Citation

Moore, Marc T. and Moore, Marc T., The (Neglected) Value of Board Accountability in Corporate Governance (February 17, 2015). University of Cambridge Faculty of Law Research Paper No. 9/2015, Available at SSRN: https://ssrn.com/abstract=2566335 or http://dx.doi.org/10.2139/ssrn.2566335

Marc T. Moore (Contact Author)

University College London, Faculty of Laws ( email )

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London WC1E OEG, WC1E 6BT
United Kingdom

University College London, Faculty of Laws ( email )

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London, England WC1H 0EG
United Kingdom

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