TY - JOUR
T1 - Outside director liability
T2 - A policy analysis
AU - Black, Bernard S.
AU - Cheffins, Brian R.
AU - Klausner, Michael
PY - 2006/3/1
Y1 - 2006/3/1
N2 - Outside directors of public companies play a central role in overseeing management. Nonetheless, they have rarely incurred personal, out-of-pocket liability for failing to carry out their assigned tasks, either in the litigation-prone United States or other countries. Historically, as threats to this near-zero personal liability regime have appeared, market and political forces have responded to restore the status quo. We suggest here reasons to believe that this arrangement is justifiable from a policy perspective, at least in countries where reputation and other extra-legal mechanisms provide reasonable incentives for outside directors to be vigilant.
AB - Outside directors of public companies play a central role in overseeing management. Nonetheless, they have rarely incurred personal, out-of-pocket liability for failing to carry out their assigned tasks, either in the litigation-prone United States or other countries. Historically, as threats to this near-zero personal liability regime have appeared, market and political forces have responded to restore the status quo. We suggest here reasons to believe that this arrangement is justifiable from a policy perspective, at least in countries where reputation and other extra-legal mechanisms provide reasonable incentives for outside directors to be vigilant.
UR - http://www.scopus.com/inward/record.url?scp=33645522441&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=33645522441&partnerID=8YFLogxK
U2 - 10.1628/093245606776166543
DO - 10.1628/093245606776166543
M3 - Article
AN - SCOPUS:33645522441
VL - 162
SP - 5
EP - 20
JO - Journal of Institutional and Theoretical Economics
JF - Journal of Institutional and Theoretical Economics
SN - 0932-4569
IS - 1
ER -