Director FAQs and Essentials

Corporate Governance and Financial Performance Link FAQ

By NACD Staff


Director FAQ Financial Oversight

In brief: Companies pay to have directors, who are required or expected to follow mandated or recommended governance standards while also serving as guardians of long-term corporate performance. But do directors and boards actually add value? And if so, how?

This fact sheet can help directors to balance the goals of good governance and corporate performance by understanding their linkage. Directors will learn what empirical research says about the link between governance and performance, and can use this information to ask nuanced questions about the financial impact of proposed governance changes, push back against governance proposals that are not likely to lead to better financial performance, and support proposals that are likely to foster better financial performance.

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