Principles of Corporate Governance and Effective Board

The role boards play in firms is definitely beyond just the financial performance of the firm. Consequently, boards are typically enacted by law in most countries especially for publicly quoted companies. Furthermore, boards are deemed an essential component of the corporate governance of firms given their monitoring, control and supervisory functions. Despite the composition of boards, firms still undergo crisis and in many circumstances fail. Given this perennial firm failures despite regulations, there has been an increased focus on corporate governance practices of firms especially as it is seen as a mechanism that can guarantee the long term going concern of a firm. As a result many scholars have attempted to deconstruct the role of boards. This chapter examines the relevance of the board taking into consideration the different governance models prevalent in different institutional contexts. The chapter also provides some insights into relevant theories that guide corporate governance in many climes.