Copyright (c) 2008 All rights reserved. http://works.bepress.com/deborah_demott Recent documents in Deborah A DeMott en-us Wed, 02 Jan 2008 22:28:58 PST 3600 http://works.bepress.com/deborah_demott/1 http://works.bepress.com/deborah_demott/1 Fri, 14 Sep 2007 08:32:55 PDT By some measures, family-controlled companies account for about a third of public companies in the United States. Public companies that retain characteristics of family companies pose a series of intriguing questions about corporate governance that center in particular on the roles and duties of directors. These are surprisingly unexplored in legal scholarship. Although concentrated ownership is more extensive in many capital markets outside the United States, numerous recent examples raise questions about governance within publicly-held family companies. In such companies, shareholders who are members of the founding family often have perspectives and interests that diverge from those of non-family public shareholders.This paper focuses on directors who are independent of both management and the controlling family and identifies a set of functions that they are uniquely situated to fulfill. Independent directors are the sole actors at the highest level of firm governance with the capacity to bring detached judgment to bear in resolving difficult questions that implicate family ties as well as business necessity, including senior management succession and external threats to the firm's position and separate existence. The paper relies on recent empirical studies that quantify the incidence of family-controlled public companies, examine their performance relative to other public companies, and identify characteristics that are associated with better or worse firm performance. The paper also relies on reported cases to furnish concrete illustrations of variations in independent directors' effectiveness. Deborah A. DeMott Corporations