Corporate governance, risk and crises in small companies: shedding light from inside the boardroom black box

Abstract

Th e extant literature consistently identifi es small companies as being inherently fragile, rendering them more liable to fail than their larger counterparts in the event of a crisis occurring. Th is paper considers the fi ndings of a series of interviews with directors of small companies concerning corporate governance, risk and their preparedness to manage a crisis. Current corporate governance practice adds little to the eff ective management of crises in small companies where a prevailing attitude of denial by directors limits meaningful actions to prevent or mitigate the consequences of unanticipated events. Th e paper also incorporates the observations of the author, a board chairman for over 30 years, concerning corporate governance in practice within small companies.