In the field of corporate governance, the roles of the board of directors in a corporation are the central part to operate a big corporate entity. The main roles for the directors are to implement control and management in the organization to run all the functions in a smooth manner (Ferris & Yan, 2007). The main responsibilities and duties of the directors in an organization are to define the policies and procedures of the organization, of that the middle and lower management can follow these regulations to achieve the task and fulfill the goals of the organization and maintain ethics (Bradley & Chen, 2011).
They have power to select the agents and officers, who works on the behalf of organization in the industry. They declare dividend and work on the major events that can affect the performance of the company (Andres & Vallelado, 2008). Apart from this some duties of the directors are acquiring enough resources for the operations of organization, selection of CEO, etc. (Ferris & Yan, 2007). Boards of Directors defined ethical code of the conduct in the organizations, which comprises integral practices, public disclosures, compliance with the legal rules and regulations, etc.
In the public corporations the responsibilities of the directors are more critical in comparison to closely held corporations. The board of directors should be held liable for any type of fraud in the company because they make policies and develop codes of conduct in the business firm. Their fiduciary responsibilities comprise the management of corporate affairs, so that stakeholders can get best values. Stakeholders such as investors, customers, etc., trust board of directors, as they are policy makers and govern organization ethically and legally. If any kind of fraud and illegal activities takes place in the firm, board of directors are responsible to give an answer to the stakeholders.
The role of the CEO is different from the role of the board of directors. The CEO is the