Final answer:
The board of directors is elected to govern a firm in the shareholders' best interests and evaluates top executives while shaping company strategy. However, the influence of executives over board nominations may lead to governance issues as seen in historical corporate failures.
Step-by-step explanation:
The board of directors is instrumental in corporate governance and acts as a key player in ensuring that a firm operates in the shareholders' interests, who are the true owners of the company. The roles of the board include evaluating the caliber of senior executives and deciding on the firm's vision, mission, objectives, and strategy execution. However, a challenge arises as top executives often have significant influence over who is nominated to the board, which can lead to a potential conflict of interest if they choose candidates who are less likely to question their decisions or strategies. This influence can hinder the board's objective of serving the shareholders' best interests, as was evidenced in corporate governance failures like that of Lehman Brothers, where investors were not provided with accurate financial information regarding the firm's operations.