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0:00
I'm Jeremy Short,
the G. Brint Ryan Chair
in Entrepreneurship and
Professor of Management at the
University of North Texas.
Managing large firms is
a complicated task and
managing them successfully is
often a function of effective
corporate governance.
I'm excited to tell
you a little bit about
the various roles of
boards of directors
and to outline some
important issues relevant
to learning more about
corporate governance.
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Shakespeare once famously
noted that all the
world's a stage and the men
and women merely players,
boards of directors
are asked to play
many roles in their
official capacity,
including acting as an
accountant, lawyer,
adviser, activist, human
resource manager and agent.
In the United States in 2002,
the Sarbanes Oxley
Act was passed in
efforts to ensure that
board members play
their roles to carefully
serve key stakeholders
with the firm
and not just act as
rubber stamps for the
CEO and president.
0:59
Unfortunately, board
members do not
always manage each of
these roles effectively,
the study of corporate
governance is often linked to
issues of boards approving
lavish CEO perks,
that suggests there is not
always great accountability
from board members.
While some are
fairly pint-sized,
like the CEO of Ben and
Jerry's receiving
ice cream for life,
others are more decadent,
such as access to
corporate jets for
personal use and a car and
driver for life in some cases.
1:28
Given their power and influence,
CEOs and boards are
ideally operating at a high
level of moral reasoning.
Psychologists Lawrence
Kohlberg noted
three levels of reasoning,
ranging from Level 1,
where actions are tied
to personal concerns,
such as avoiding
punishment, Level 2,
where actions are compared to
the expectations of
society and Level 3,
where individuals act based on
personal ethics and
higher-level moral principles.
Example of a
higher-level principle
would be the golden rule
where individuals act towards
others as they hope
others might treat them.
