Are Boards Designed to Fail? The Implausibility of Effective Board Monitoring

In this review, we challenge the idea that directors are well positioned to be effective monitors of management. Moving beyond the logic of incentives and ability, we conceptualize a model based on the premise of boards as groups of individuals obtaining, processing and sharing information and explain how variation in information-processing demands at the director, board and firm level may challenge effective monitoring. We draw on multiple...