Abstract:
The Corporate Board structure is an indispensable constituent of the corporate
governance of entities, and the appropriateness of the various models is one of the most
contested issues in the corporate governance arena today. The corporate board structure
is an integral part of corporate governance. It also significantly influences corporate
growth and is governed and regulated by the legal and regulatory framework in order to
protect shareholders' rights and curb malpractices. Three types of Board Structure, one-tier
board, two-tier board and optional model, are widely adopted in various jurisdictions to
enhance a firm’s corporate governance in the contemporary world. It has been argued
that strong corporate governance should function as a mechanism designed to achieve
this objective. However, having strong corporate governance depends on a couple of
institutional factors and among these corporate board structures, due to the nature of
having effective and efficient corporate governance, a mandatory two-tier board
structure has been usually the preferred model for ensuring good corporate governance..
One of them is the firm’s board structure.
Ethiopia has been using optional two-tier board structure for its corporate governance.
The studies conducted proved-out that corporate governance practice in Ethiopian share
company law considered as inadequate. Other study even stated that existing corporate
board structure is one of the reasons for weak corporate governance and prevailing
agency problems in the Ethiopian Share Company Laws. the This study explores the
importance of a mandatory two-tier corporate board structure for effective and efficient
corporate governance in the Ethiopian corporate governed system. It finally recommends
the adoption of a mandatory two-tier corporate board structure as a suitable and
appropriate board structure
