The Role of Independent Directors in Corporate Governance

Abstract

The article discusses the role of the independent directors corporate governance. Since the 1990s worldwide there has been a growing recognition on legal and regulatory measures for strengthening the board of directors for effective supervision and monitoring of the top management of companies. Since many internal and external mechanisms for monitoring the management of corporations has not been generally effective several task forces and committees in USA, England, Canada, and Europe have focused on highlighting the role of the non-executive outside independent directors. However, corporate boards in general heave the required number of such directors but have been found devoid of minimum contribution to governance process. Further the growing body of literature on the subject shows a mixed trend and offers the illustrations of Enron, Global Crossing, Tyco, and several such mega corporations where the presence of independent directors did not help the decline and fall of such corporations. The present article identifies some opportunities for enhancing the role efficacy of the independent directors in companies in India.