Board Diversity and Good Corporate Governance

March 9, 2011

A great article from the “Deal Professor” on diversity helping corporate boards. He opines that:

Despite the experience of the financial crisis, no one expects a board member to be able to price a complex derivative. In the case of a financial institution, the job of a director is about asking good questions and monitoring. Those who want or expect more from a financial firm would end up having a board of math Ph.D.s to the exclusion of all else. This concept applies to other types of companies like General Motors, which, before its bankruptcy, suffered because its board was unwilling to challenge management.

He’s right. A board filled with the CEO’s friends is a thing of the past, and boards of directors now need to be more competent and alert than ever.

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