Abstract
Purpose – The purpose of this paper is to examine the relationship between board alignment with shareholder interests using a new measure of perceived board effectiveness, which is designed to capture the alignment of the directors with the interests of shareholders.Design/methodology/approach – Specifically, the paper looks at the Rotman/Clarkson (CCBE2) Canadian Board Shareholder Confidence Index as the measure of shareholder's perceptions of the board's efficiency as it relates to company performance. The index is ostensibly designed to capture the essential factors affecting shareholders' confidence in the boards' abilities to fulfill their duties. The CCBE2 Board Shareholder Confidence Index assigns scores to companies based on the consideration of the following three perspectives: potential of individual board members; potential of the board as a group and past practices of the board. The measure of performance is the firm's Economic Value Added™ (ER), which is a metric for a company's ability to ge...
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