Mitigating the toxic director: Strategies for identifying and managing toxic behavior to prevent exponential costs

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

Toxic boardroom dynamics threaten the integrity of corporate governance, leading to financial losses, regulatory scrutiny, and stakeholder mistrust. This article proposes a decision-tree framework designed to systematically identify, document, and mitigate toxic behaviors before it escalates. Using international case studies, we demonstrate how unchecked board toxicity leads to governance failures, reputational damage, and ESG misalignment. The framework integrates legal principles, behavioral psychology, and corporate governance best practices, equipping boards with a structured intervention process, including director dismissal when necessary. By adopting this proactive strategy, organizations can strengthen ethical leadership, reinforce investor confidence, and prevent exponential governance costs.

Keywords: Corporate Governance, Governance Integrity, Boardroom Dynamics, Toxic Board, Director Dismissal, Ethical Leadership, ESG, Stakeholder Confidence, Financial Risk Mitigation

Authors’ individual contributions: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G34, K2, M14, Q56

Received: 11.09.2024
Accepted: 21.02.2025
Published online: 26.02.2025

How to cite this paper: Bar-Hava, K. (2025). Mitigating the toxic director: Strategies for identifying and managing toxic behavior to prevent exponential costs. Corporate Board: Role, Duties and Composition, 21(1), 37–48. https://doi.org/10.22495/cbv21i1art4