Outsourcing the Board

de Stephen M. Bainbridge, M. Todd Henderson

"In this groundbreaking work, Stephen Bainbridge and Todd Henderson change the conversation about corporate governance by examining the origins, roles, and performance of boards with a simple question in mind: why does the law require governance to be delivered through individual board members? While tracing the development of boards from quasi-political bodies through the current "monitoring" role, the authors find the reasons for this requirement to be wanting. Instead, they propose that corporations be permitted to hire other business associations-known as "Board Service Providers" or BSPs-to provide governance services. Just as corporations hire law firms, accounting firms, and consulting firms, so too should they be permitted to hire governance firms, a small change that will dramatically increase board accountability and enable governance to be delivered more efficiently. Outsourcing the Board should be read by academics, policy makers, and those within the corporations that will benefit from this change"-- "This book is an exploration of the reasons why, which (to spoil the plot) we find the current state of corporate governance-especially the role and function of the board of directors-woefully wanting, and why and how we should change the law to accommodate more innovation in corporate governance. The world is only getting more complex for corporations, as markets expand and share ownership transitions increasingly to passive investing, and the need to rethink corporate governance is acute. In the following pages, we offer a path forward that does not rely on any brilliant insights or tricks. Our mantra is simple: let markets work. Although this book is intended for corporate governance scholars and policy makers, we hope it is accessible to board members, corporate executives, legislators, judges, and the interested public. It is a book by two academics, but it is not written in high academic style. So, if you've gotten this far, don't be turned off thinking this is going to be a dry casebook filled with citations and equivocations. We hope this ride through the history, practice, and (hopefully) future of corporate boards is as entertaining as it is informative and thought provoking"--