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Board to Death: How Busy Directors Could Cause the Next Financial Crisis

dc.contributor.authorKress, Jeremy C.
dc.date.accessioned2017-07-06T16:59:34Z
dc.date.available2017-07-06T16:59:34Z
dc.date.issued2017-07
dc.identifier1370en_US
dc.identifier.citationForthcoming Boston College Law Review
dc.identifier.urihttps://hdl.handle.net/2027.42/137671
dc.description.abstractThis article argues that the directors of the United States’ largest financial institutions are too busy to execute their governance roles effectively. Most financial institution directors serve on the board of at least one other company, and many directors also hold full-time executive positions. These outside commitments provide important learning and networking opportunities that can enhance a director’s effectiveness. Outside commitments, however, might also limit the time that a director spends assessing the firm’s strategy and risk or contribute to cognitive overload. Overcommitted directors, therefore, might consciously or subconsciously shirk their advising and monitoring responsibilities. This article contends that the drawbacks of director busyness are especially severe for large, complex financial institutions because of the unique governance demands imposed on their boards and the systemic externalities of poor financial institution governance. Through a series of case studies—including JPMorgan’s London Whale trades and Wells Fargo’s fraudulent account scandal—the article explores how director overcommitment inhibits oversight of management, increases the risk of firm failure, and could cause the next financial crisis.en_US
dc.subjectBusy Directorsen_US
dc.subjectOvercommitmenten_US
dc.subjectCorporate Governanceen_US
dc.subjectBoard of Directorsen_US
dc.subjectBoard Compositionen_US
dc.subjectFinancial Institutionsen_US
dc.subjectLondon Whaleen_US
dc.subjectWells Fargoen_US
dc.subject.classificationLaw, History, Communicationen_US
dc.titleBoard to Death: How Busy Directors Could Cause the Next Financial Crisisen_US
dc.typeWorking Paperen_US
dc.subject.hlbsecondlevelBusiness (General)en_US
dc.subject.hlbsecondlevelFinanceen_US
dc.subject.hlbtoplevelBusiness
dc.contributor.affiliationumRoss School of Businessen_US
dc.contributor.affiliationumcampusAnn Arbor
dc.description.bitstreamurlhttps://deepblue.lib.umich.edu/bitstream/2027.42/137671/3/1370_Kress.pdf
dc.description.bitstreamurlhttps://deepblue.lib.umich.edu/bitstream/2027.42/137671/5/1370_Kress_.pdf
dc.description.filedescriptionDescription of 1370_Kress.pdf : June 22, 2017
dc.description.filedescriptionDescription of 1370_Kress_.pdf : Forthcoming BCLR update
dc.owningcollnameBusiness, Stephen M. Ross School of - Working Papers Series


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