Behavioral Finance In Corporate Governance Independent Directors And Essay

Behavioral Finance In Corporate Governance Independent Directors And Non-Executive Chairs, And The Importance Of The Devils Advocate - Essay Example Introduction †¢ many employees sacrifice their careers and reputation because of loyalty to their CEO †¢ Loyalty is misused through misplaced loyalty in certain organizations. Milgram experiment †¢ Milgram experiment test innate loyalty through psychology experiment. †¢ psychological attributes of the respondents was testing in mock experiment †¢ subjects were made to electrocute stranger contrary to their own beliefs Leadership and corporate governance †¢ Modern liberal corporate governance calls for different professionals in leadership restrained by laws and rules. †¢ The leaders are given different authorities to run organizations. †¢ The CEO have are appointed by the Board of the organization †¢ The boards remain loyal even to CEOs that are misguided. †¢ Many boards detest disagreeing with CEO they feel that would be perceived as disloyalty. Dissenting peers and conflicting authorities †¢ The Milgram experiment explains how people dissent peers and conflict authority. †¢ Cases of dissenting peers voice their concerns; the subjects reduce their loyalty levels to the authority.