Reducing the mandate of top executives— and the broader undermining of top management functions—is no longer a good governance practice but rather an indicator of a crisis: that of the legitimacy of top management teams.
The reforms in corporate governance that were initiated in the 1990s and have accelerated in the current decade have contributed to a greater balance of power between shareholders and top executives, in particular by strengthening measures designed to keep the latter in check. Left to develop unchallenged, however, these reforms could weaken companies by denying their top management teams the chance to build up sufficient legitimacy to govern.
Companies can no longer afford to be without strong and competent top management; this is why it is time to consider the legitimacy of top management teams, this much-neglectedand even mishandleddimension of corporate governance.
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