The (neglected) value of board accountability in corporate governance

• Published in: Law and Financial Markets Review Vol. 9; no. 1; pp. 10 - 18
• Main Author: Moore, Marc T
• Format: Journal Article
• Language: English
• Published: Routledge 02.01.2015
• ISSN: 1752-1440; 1752-1459
• DOI: 10.1080/17521440.2015.1032073

The concept of board accountability is central to literature and debates on corporate governance, not least in the United Kingdom and United States. However, as a social phenomenon it is frequently misunderstood, particularly by corporate lawyers. This article identifies two particularly common misunderstandings of the term within a legal context, where it has tended to be viewed (erroneously): first, as a mitigating counter-pressure to directorial decisional authority; and, second, as an inherent structural corollary to shareholder decisional empowerment - or, vice versa - board decisional disempowerment. The article takes issue with both of these perspectives, and - in response - develops a more nuanced alternative understanding of board accountability in corporate governance, derived from sociological and institutional-economic insights into the nature of accountability as a discrete social-relational practice. Essentially, accountability is understood here as the compelled provision by an authorised decision-maker (to her recognised decision-beneficiary) of normatively cognisable reasons in support of her discretionary decisions and/or actions, which has the ultimate effect of legitimising - and, in turn, sustaining - relational power imbalance between private decisional parties. By recognising these broader dimensions of board accountability as a social phenomenon, corporate lawyers - it is submitted - will be better positioned in future to grapple with the full institutional complexity of corporate governance as a subject of legal enquiry.