Document Type
Article
Publication Date
5-1-2005
Abstract
This research focused on corporate independent directors and senior executive officers: their perceptions of Sarbanes-Oxley; their roles and responsibilities as officers and directors; how board relationships have transformed as a result of Sarbanes-Oxley; and how the CEO-board and board member-board member trust dynamics impact the management of the board. Implicit in Sarbanes-Oxley is agency theory and the responsibility of independent directors to monitor and control management. The central findings are that independent directors and executive officers are culturally adapting to the new institutional environment of Sarbanes-Oxley, and their new relationship is characterized by "creative tension" whereby distinct and separate roles require mutual trust. Creative tension includes a trust dynamic of high trust/high distrust. The board member-board member relationship, an increasingly important factor in board functioning, is illuminated by stewardship theory, and requires mutual dependency among directors. The trust dynamic characteristic of this relationship is high trust/low distrust. Four governance types emerge; traditional, traditional-progressive, progressive-traditional and progressive in determining director roles. Success of the board depends on trust, yet Sarbanes-Oxley relies on a presumption of distrust, which can thwart creation of an effective and sustainable board.
Keywords
Sarbanes-Oxley Act of 2002, corporate governance, agency theory, stewardship theory, high trust/high distrust, high trust/low distrust, creative tension
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Ettner, Larry W., "Corporate Governance in the Era of Sarbanes-Oxley: Governance Types and Trust Dynamics" (2005). Student Scholarship. 148.
https://commons.case.edu/studentworks/148