Question

What are important characterisitics of corporate directors? Are corporate directors independent? Is there any academic research that finds independent directors are really independent?

Answer 1

Some of the important characteristics of corporate directors are:

• They should have excellent leadership skills and communication skills as well.
• They should be brave enough to take business risks.
• They should be open-minded so as to bring in diversity in the work force
• The should be committed to the achievement of the goals that are set by the company
• They should be well-prepared to handle any crisis in the company
• They should be good at corporate governance.

Some of the corporate directors are independent directors. They are non-executive director of a company who help to improve the corporate credibility and governance standards of the company. They do not have any pecuniary relationship with the company,

Yes, independent directors are really independent as they have no relationship with the company. Their decisions are completely independent of the company. This is as per Clause 49 of the Listing agreement.

Reference:

Iti Bose, (2009) Corporate governance and law - role of independent directors, Social Responsibility Journak, Vol. 5, Issue 1, pp. 94 - 111