Why are Outside Directors Appointed? Do they Improve Corporate Performance?

Professor Saito of Kyoto Sangyo University has producedextensiveanalysis and several papersshowing thatJapanese companies that appoint at least one outside director experience improvement in operating performance and more dependable projections.

Boards with and without Outside Directors: An Empirical Comparison

The Determinants of Board Composition when Managers Control Director Selection: Evidence from Japan

NYSE’s Commission on CG: Put Enough Managers on the Board

The report of the NYSE Commission, issued this fall, summarized this particularreccommendation in the following way in its press release:

While independence is an important attribute for board members, the NYSE’s Listing Standards do not limit a board to just one non-independent director, and boards should seek an appropriate balance between independent and non-independent directors to ensure a proper mix of expertise, diversity and knowledge.