1) What if there is an “Interlocking Board of Directors”? (Mizruchi, 8/1996). This entity refers to the practice of members of a “corporate board of directors” that serve on other “corporate boards of directors” for multiple corporations at the same time, e.g., a board member on McDonald’s board “interlocks” (or serves) as board member of Burger King’s board. Could this be? What’s wrong with this picture? Why? Why not?
Sample Solution
The potential problem with an interlocking board of directors is that the members may not be able to offer independent, unbiased advice and make decisions in each company’s best interest due to their conflicts of interests when serving on multiple boards. For instance, a board member who serves on both McDonald’s and Burger King’s boards may have divided loyalties when it comes to making critical decisions for each company. This lack of independence may lead to self-interested motives among the board members, resulting in potentially less effective decision-making for each corporation.
Sample Solution
The potential problem with an interlocking board of directors is that the members may not be able to offer independent, unbiased advice and make decisions in each company’s best interest due to their conflicts of interests when serving on multiple boards. For instance, a board member who serves on both McDonald’s and Burger King’s boards may have divided loyalties when it comes to making critical decisions for each company. This lack of independence may lead to self-interested motives among the board members, resulting in potentially less effective decision-making for each corporation.