CHAPTER ONE INTRODUCTION 1.1 Background of the Study The corporate board is made up of three important characters namely the CEO, the inside directors who are in most cases senior managers of the firm, and outside directors, and all these have the knowledge of what a good and a bad project is. The main responsibility of the board is to offer vision and direction for any corporate entity. Indeed, the board is about the one most important constituency of a corporate entity. Every corporate board has at least one outside director. All outside from enhanced director’s benefit performance of the firm. The fundamental question that has escaped the needed attention is what determines a corporate board structure and its composition. The structure, role and impact of Board on Firm performance has been studied by scholars from different disciplines such as law, economics, finance, sociology, and organizational theory (Kiel, 2010) resulting to a number of contrasting theories and greater the difficulty of and this adversely affects a performance. firm’s The board of directors is charged with oversight of management on behalf of shareholders. Agency theorists argue that in order to protect the interests of shareholders, the board of directors must assume an effective oversight function. It is assumed that board performance of its monitoring duties is influenced by the effectiveness of the board structure. Firms are regarded as consisting of cognitive, normative and regulative structures and activities that give meaning to social behaviour (Ayogo, 2005). Societal norms have been seen to influence Board decisions regarding CEO selection and
CHAPTER ONE INTRODUCTION 1.1 Background of the Study The corporate board is made up of three important characters namely the CEO, the inside directors who are in most cases senior managers of the firm, and outside directors, and all these have the knowledge of what a good and a bad project is. The main responsibility of the board is to offer vision and direction for any corporate entity. Indeed, the board is about the one most important constituency of a corporate entity. Every corporate board has at least one outside director. All outside director’s benefit from enhanced performance of the firm. The fundamental question that has escaped the needed attention is what determines a corporate board structure and its composition. The structure, role and impact of Board on Firm performance has been studied by scholars from different disciplines such as law, economics, finance, sociology, and organizational theory (Kiel, 2010) resulting to a number of contrasting theories and greater the difficulty of and this adversely affects a firm’s performance. The board of directors is charged with oversight of management on behalf of shareholders. Agency theorists argue that in order to protect the interests of shareholders, the board of directors must assume an effective oversight function. It is assumed that board performance of its monitoring duties is influenced by the effectiveness of the board structure. Firms are regarded as consisting of cognitive, normative and regulative structures and activities that give meaning to social behaviour (Ayogo, 2005). Societal norms have been seen to influence Board decisions regarding CEO selection and
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