Outside Directors

QUITE SIMPLY, outside directors are those members of a company's board of directors without executive responsibilities, and who often face information asymmetry about the company. They are usually appointed to the board of directors for their contribution to the expansion of the enterprise's strategy and to provide important knowledge not otherwise available to management. Outside directors, like inside directors, have two main roles: to ensure that the company delivers returns to shareholders (the performance function) and to ensure it acts in accordance with laws and regulations (the accountability function).

However, given the distance of their day-to-day operations, outside directors have more of a role to play in terms of the accountability function than in terms of the performance function. Outside directors are beneficial to an enterprise ...