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Sven-Olof Yrjö Collin and Elin Smith

Independent directors are considered to be an important part of ‘good governance’ and are present in regulation, for example in corporate governance codes. The concept is, however, vague and often one-dimensional, stressing the material side of dependence. We present a four-dimensional concept of independence through the two human conditions of opportunism and bounded rationality, where opportunism influences independence through material and social concerns and bounded rationality influences independence through cognitive dependency and information regulation. With this conception we suggest a praxis hypothesis, claiming that there is a will, of the individuals and of the dominant coalition of the firm, which uses the four dimensions of independence when selecting directors of the board and board committees, and influencing directors on the board, that creates the managed independent director.