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Authors: Taylor Griffin, David F. Larcker, Stephen A. Miles, and Brian Tayan, Stanford Closer Look Series, March 2017
The boards of all publicly traded companies are required to conduct a self-evaluation at least annually to determine whether they are functioning effectively. Research suggests that while many directors are satisfied with the job that they and their fellow board members do, board evaluations and boardroom performance fall short along several important dimensions. We review the current state of board evaluations, and summarize how they can improve.
• Why do board evaluations fail to review the performance individual directors?
• What are the social and psychological barriers to conducting effective evaluations, and how can they be reduced?
• What behaviors are required to be successful in a boardroom setting?
• How important is boardroom culture, and how does it influence decision making?