 Boards won’t be well positioned to take on greater responsibilities for company performance unless they can have access to the right information at the right time. However, despite the growing availability of information about publicly traded companies, directors traditionally rely solely on information that comes from management when they make boardroom decisions.
This condition of dependence results from what we term “information asymmetry.” And if boards are to effectively fulfill their duties, they may well want to shift the balance by seeking—with management’s blessing—both more information and information from independent sources. In this research note we explore different dimensions of this question, including how information promotes or inhibits boardroom independence, where this issue falls on the corporate governance agenda and the situations in which information asymmetry becomes especially salient. This is the first in a series of research notes that will address the use of information to enhance boardroom decision making and corporate governance in general. Upcoming notes will focus on legal and regulatory scenarios in which information asymmetry might soon become an even greater concern, and on the role that technology could play in corporate governance in the future. |