Title: Bias in the boardroom

Authors: Oliver Marnet

Addresses: University of Exeter Business School, Streatham Court, Rennes Drive, Exeter, EX4 4PU, UK

Abstract: This paper investigates the impact of social and psychological factors on the quality of boardroom decision-making. It is argued that bias in the boardroom undermines the monitoring function of boards, with a particularly negative impact on the functional independence of non-executive directors. The study is informed by a two-year participant observer case study of the governance failures of a housing association that experienced significant adverse performance resulting in its near collapse. The case study adds insights to the theoretical discussion by highlighting the pervasive nature of bias in boardroom proceedings. The paper closes by exploring means to minimise the impact of bias.

Keywords: behavioural accounting; behavioural finance; boardroom decision making; non-executive independent directors; bias mitigation; case study; social factors; psychological factors; monitoring; functional independence; corporate governance; housing associations.

DOI: 10.1504/IJBAF.2011.045015

International Journal of Behavioural Accounting and Finance, 2011 Vol.2 No.3/4, pp.238 - 251

Published online: 20 Jan 2012 *

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