Exploring the rationale for board accountability in corporate governance

Accountability is frequently referred to in the corporate governance literature, and it is clearly regarded as an important concept. One form of accountability that is significant, according to the literature, is board accountability. But there has been little explanation given as to why it is a critical element for corporate governance. This paper identifies and then explores the possible reasons that are, or can be, given for regarding board accountability as a significant element in corporate governance. It then assesses them in order to ascertain whether they can be, or should be, regarded as sound rationales for demanding board accountability. The paper addresses agency problems, the nature of the board and shareholder vulnerability and finds significant arguments against them being rationales for accountability. It then argues that the best rationale for requiring the accountability of boards is the need for the power of boards to be legitimated.