Posted by David Javakhadze, Florida Atlantic University, on Tuesday, June 6, 2017
Editor's Note: David Javakhadze is Assistant Professor of Finance at Florida Atlantic University. This post is based on a recent paper by Professor Javakhadze; Stephen P. Ferris, Professor and Director of the Financial Research Institute at the University of Missouri at Columbia; and Yun Liu, Assistant Professor of Finance at the Claremont Colleges’ Keck Graduate Institute.
While there has been considerable public focus and academic research on executive compensation, boardroom compensation has received relatively little attention. Boards perform increasingly crucial functions of advising and monitoring the executive team. Consequently, boardroom performance has important implications for corporate decisions. As a result of the 2008 financial crisis boardroom functioning, including director expertise, oversight practices, compensation, and board structure, has been under careful scrutiny by shareholders as well as by regulators, requiring directors to be more actively involved in strategic decision-making.