Independent directors: a brief history of their role and impact on firms' performance

The thesis revolves around the role of the board of directors, in particular the independents, in public companies’ corporate governance. The particular ownership structure that characterizes these types of organizations has a significant impact on the governance of companies as, the presence of a highly dispersed ownership structures, exacerbates the problem of separation of ownership and control. The owners of companies, which are the shareholders, do not have the necessary information or efficient means to control the managers, which are the de facto controllers of the companies. The principal-agent problem arises, under which the managers may adopt opportunistic behavior with the objective of increasing their own utility to the detriment of shareholders. The rise of conflict of interests calls for a solution which, according to literature, can be the board of directors, in particular independent directors which act as protectors of the interest of shareholders. To better understand the evolution of the role of independent directors, the work will focus on the two most important countries with regards to corporate governance theory, the US and the UK, which were a major influence for other corporate governance frameworks around the world, with a focus on the main historical moments that drove this evolution. The last chapter is a focus on a recent court case, Tornetta v Musk I, which is an interesting real-world case study on how the internal dynamics of corporate governance interact with the regulatory framework and corporate governance theory, in particular the importance of the role of the board of directors and the remuneration committee in acting as protectors of shareholders’ interests against the managers.