Reviewing Directors’ Business Judgements: Views From The Field

Directors take decisions that can have significant impacts on others, as illustrated by the global financial crisis and the collapse of Thomas Cook Group plc. Yet many academics argue that courts should not review or impose liability on directors for poor business judgements. These arguments often rely on untested empirical assumptions about directors’ behaviour and attitudes. Through semi‐structured interviews and focus groups, we explored the responses of directors, legal practitioners, company secretaries, and board headhunters to the prospect of judicial review of directors’ business judgements. Our findings challenge orthodox thinking: many directors supported some form of review and the impact of review may not be as great as the literature predicts, nor necessarily detrimental. The debate about whether courts should review directors’ business judgements should therefore move away from reliance on negative empirical assumptions about the impact of review, to clearly articulating, and engaging with, normative positions that underpin opposition to, and support for, review.