Concepts of Board Performance: Review of Performance Metrics in Boards Research

Abstract

This paper discusses concepts of board performance. Long traditions exist for using corporate financial metrics as indicators of board performance. I argue that a financial perspective alone is insufficient and sometimes misleading, and thus suggest addition of alternative measurement concepts.

Arguments are based on analysis of extant research on boards and board directors. The concepts proposed in this paper are building on strategic review of board research articles in main international academic journals. I conclude from the research that board performance should be measured based on how boards are contributing to value creation. It was illustrated though the review that value creation takes place in intermediate steps and that board performance should be measure accordingly.