Outside director

An outside director is a member of a corporation's board of directors who is not an employee of the organization. Outside directors are valued, because they are less likely to be influenced by the managers of the company. Also, they have a different background from corporate insiders, and so can bring a different perspective to the various issues faced by the organization. For these reasons, stock exchanges frequently require that a certain proportion of outside directors be included on a board of directors.

However, outside directors have a reduced knowledge of the inner workings of the companies for which they serve as directors, and so can make incorrect decisions due to this ignorance.

Related Courses

CFO Guidebook 
Public Company Accounting and Finance