When accountability and identity collide: how director identity shapes board tenure

Abstract

ABSTRACT This paper examines why some non-executive directors outstay their welcome and serve on boards beyond recommended tenure limits. Based on interviews with experienced non-executive directors in Australia the study shows that directors can serve for too long on corporate boards and that these prolonged tenures can create governance concerns for shareholders. To explain what motivates board directors to serve beyond the tenure limits generally accepted as best practice, the study draws on role identity theory and provides evidence that board directors can be reluctant to relinquish their board position if doing so means that they can no longer call themselves a board director. Decisions of continued board service can therefore create a tension for non-executive directors who are expected to be accountable and promote shareholders’ interests yet may instead be motivated to protect their own identity as a director. These insights have relevance for boards and corporate governance practice and suggest a board renewal policy can act as an important defence against directors’ reluctance to leave a board voluntarily.