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Board Independence

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Board Independence
The state in which all or a majority of the members of a board of directors do not have a relationship with the company except as directors. For example, they may not be relatives of the company's founders, key players or major employees. In the United States, the SEC and individual exchanges require board independence.


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2007) document that board independence increases as firms grow in size and diversity over time.
The negative correlation between CEO ownership and board independence suggests that CEOs' control over the board increases with their equity positions within the firm.
This has included a whole gamut of reforms evolving over time to deal with the constitution and functioning of corporate boards, the most important of which are regulations aimed at ensuring board independence from internal management and improving the quality of board governance.
 
 
 
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