Directors and Corporate Governance

I wonder how many frauds could have been prevented if board members had been more active in protecting the interests of shareholders. While most, if not all, recognize the need for a strong, independent board, I don't know that our current system encourages board members to actively pursue shareholder interests.

My personal (anecdotal) experience with directors is that most boards seems to be comprised in a manner similar to the following example:

• Chairman of the Board (usually either the current or former CEO of A Corp.)
• Several other C-level executives and a few VPs from A Corp.
  
• "Independent" directors who are executives at B, C, and D Corps., where the CEO of A Corp. is also an "independent" director
• Enough additional independent directors to meet independence and expertise requirements
  

Most of these individuals seem to be inclined toward favoring management over the shareholders. In such a situation, I doubt that the remaining independent directors have enough influence over the board to adequately represent the shareholders. We can continue to stress the importance of corporate governance, but until we see more independence among board members, said governance will be flawed and will continue to be a weak deterrent to fraud.