Outside director liability: A policy analysis

Bernard S. Black*, Brian R. Cheffins, Michael Klausner

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    24 Scopus citations

    Abstract

    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.

    Original languageEnglish (US)
    Pages (from-to)5-20
    Number of pages16
    JournalJournal of Institutional and Theoretical Economics
    Volume162
    Issue number1
    DOIs
    StatePublished - Mar 1 2006

    ASJC Scopus subject areas

    • Economics and Econometrics

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