abstract
This paper argues that academics, politicians, and the media have six commonly held but
misguided beliefs about corporate governance. While Armstrong et al. (2010) discuss
some of these misconceptions, a wider recognition that these beliefs are actually ‘‘myths’’
is important. They include: (1) a common definition of ‘‘corporate governance’’ exists; (2)
a useful distinction is ‘‘internal’’ versus ‘‘external’’ governance mechanisms; (3) outside
directors perform two separable roles: to advise and monitor managers; (4) research has
identified ‘‘good’’ and ‘‘bad’’ governance practices; (5) a ‘‘good’’ governance index can be
constructed; and (6) corporate governance ‘‘best practices’’ can be deduced from
peer data.