Brennan, Niamh and McCafferty, Jacqueline [1997] Corporate Governance Practices in Irish Companies, IBAR – Irish Business and Administrative Research 18: 116-135.
This research analyses corporate governance practices as disclosed in the annual reports of Irish companies. In particular the paper investigates:
• Independence of boards;
• Separation of the role of chairman and chief executive;
• Presence of board sub-committees;
• Women on boards.
The study is based on a sample of 84 Irish quoted and commercial semi-state companies. Significant improvements were found in corporate governance practices compared with similar earlier studies. Most Irish companies comply with the Cadbury Committee recommendations. Nonetheless there is some evidence of non-compliance. There is evidence that women continue to be under-represented on boards of Irish companies.
This study examines the relationship between corporate governance and financial performance of pharmaceutical firms in Pakistan. The study uses data from annual reports of 20 multinational and 90 national pharmaceutical firms from 2003-2013. Regression analysis is used to analyze the impact of various corporate governance mechanisms (board composition, board size, board education, board experience) and CEO duality on financial performance measured by return on assets and return on sales. The results indicate that board composition, size, education and experience are positively associated with financial performance, while CEO duality is negatively associated with performance. Thus, better corporate governance through greater board independence and separation of CEO/chairperson roles can enhance pharmaceutical firm performance in Pakistan.
The document summarizes recent global developments in corporate governance practices and emerging governance principles. It discusses revisions to corporate governance codes in the UK, Hong Kong, Singapore, and South Africa. It also outlines corporate governance developments and challenges in India, including those addressed in the new Companies Bill of 2011. Key points discussed include the need for better gender diversity on boards, separation of the roles of Chairman and CEO, development of board members, appointing a lead independent director, and implementing performance evaluations.
The Impact of Corporate Governance on Firms’ Profitability in Nigeriainventionjournals
The purpose of this paper is to investigate the impact of corporate governance on firms’ profitability in Nigeria. This research has been performed using a sample of 60 companies listed on the Nigeria Stock Exchange (NSE) from 2004 to 2014. The relationship between corporate governance mechanisms (board characteristics, audit committee, board independence, size, growth and profit variability) and firms’ profitability was observed. The results of the multiple regression analysis were statistically significant at 0.05 level. The F Statistics of 1.036 also shows that the result typically explained the model. The findings of the study confirmed that corporate governance mechanisms enhance firms’ profitability in Nigeria.
This document provides an introduction and literature review on corporate governance practices in India. It discusses how weak corporate governance has led to corporate fraud cases. It then summarizes the regulatory efforts in India to improve transparency and accountability, including the implementation of Clause 49. The literature review highlights various studies that have evaluated corporate governance practices around the world and identified factors that help or hinder effective corporate governance. These include board independence, ownership structure, national culture, and regulatory enforcement. The document aims to assess adherence to corporate governance regulations among the largest Indian companies.
This study aims at examining the impact of the ownership structure on the overall performance of listed companies in Pakistan to specify how different ownership structures and corporate governance culture differ from each other and thus explores the effects of different ownership structures and corporate governance on the performance of companies’ productivity. In order to compare Returns on Investment (ROI) and Returns on Equity (ROE) of the five (5) listed food companies in Pakistan were calculated using secondary data from the audited financial reports of such companies based on their annual reports between 2007 and 2016. During this research for the analysis of gathered data, regression model was used with the assistance of EViews in order to examine the relationship between the corporate governance mechanism including board is size, board composition, and audit committee and the performance variables including Net Profit Ratio (NPR) and Rate of Return (RoR). The findings of the our study are consistent with the reviewed literature, as the performance of firms (in terms of return on assent and net profit ratio) does not seem to be dependent on the board size, composition, and audit committee composition of firms.
The document summarizes key findings from the India Board Report 2011, which gauges the effectiveness of corporate boards in India. The report is based on in-depth surveys of over 500 leading Indian companies and 150 independent directors. Some of the key findings are that only 30% of Indian companies have appointed a lead independent director, compared to 96% in the US, only 4.6% of directors are women, and while independent directors say their time commitment has increased, only 59% feel it has improved board effectiveness.
This study examines the relationship between corporate governance and financial performance of pharmaceutical firms in Pakistan. The study uses data from annual reports of 20 multinational and 90 national pharmaceutical firms from 2003-2013. Regression analysis is used to analyze the impact of various corporate governance mechanisms (board composition, board size, board education, board experience) and CEO duality on financial performance measured by return on assets and return on sales. The results indicate that board composition, size, education and experience are positively associated with financial performance, while CEO duality is negatively associated with performance. Thus, better corporate governance through greater board independence and separation of CEO/chairperson roles can enhance pharmaceutical firm performance in Pakistan.
The document summarizes recent global developments in corporate governance practices and emerging governance principles. It discusses revisions to corporate governance codes in the UK, Hong Kong, Singapore, and South Africa. It also outlines corporate governance developments and challenges in India, including those addressed in the new Companies Bill of 2011. Key points discussed include the need for better gender diversity on boards, separation of the roles of Chairman and CEO, development of board members, appointing a lead independent director, and implementing performance evaluations.
The Impact of Corporate Governance on Firms’ Profitability in Nigeriainventionjournals
The purpose of this paper is to investigate the impact of corporate governance on firms’ profitability in Nigeria. This research has been performed using a sample of 60 companies listed on the Nigeria Stock Exchange (NSE) from 2004 to 2014. The relationship between corporate governance mechanisms (board characteristics, audit committee, board independence, size, growth and profit variability) and firms’ profitability was observed. The results of the multiple regression analysis were statistically significant at 0.05 level. The F Statistics of 1.036 also shows that the result typically explained the model. The findings of the study confirmed that corporate governance mechanisms enhance firms’ profitability in Nigeria.
This document provides an introduction and literature review on corporate governance practices in India. It discusses how weak corporate governance has led to corporate fraud cases. It then summarizes the regulatory efforts in India to improve transparency and accountability, including the implementation of Clause 49. The literature review highlights various studies that have evaluated corporate governance practices around the world and identified factors that help or hinder effective corporate governance. These include board independence, ownership structure, national culture, and regulatory enforcement. The document aims to assess adherence to corporate governance regulations among the largest Indian companies.
This study aims at examining the impact of the ownership structure on the overall performance of listed companies in Pakistan to specify how different ownership structures and corporate governance culture differ from each other and thus explores the effects of different ownership structures and corporate governance on the performance of companies’ productivity. In order to compare Returns on Investment (ROI) and Returns on Equity (ROE) of the five (5) listed food companies in Pakistan were calculated using secondary data from the audited financial reports of such companies based on their annual reports between 2007 and 2016. During this research for the analysis of gathered data, regression model was used with the assistance of EViews in order to examine the relationship between the corporate governance mechanism including board is size, board composition, and audit committee and the performance variables including Net Profit Ratio (NPR) and Rate of Return (RoR). The findings of the our study are consistent with the reviewed literature, as the performance of firms (in terms of return on assent and net profit ratio) does not seem to be dependent on the board size, composition, and audit committee composition of firms.
The document summarizes key findings from the India Board Report 2011, which gauges the effectiveness of corporate boards in India. The report is based on in-depth surveys of over 500 leading Indian companies and 150 independent directors. Some of the key findings are that only 30% of Indian companies have appointed a lead independent director, compared to 96% in the US, only 4.6% of directors are women, and while independent directors say their time commitment has increased, only 59% feel it has improved board effectiveness.
Ownership and control in corporate organisations in developing countries evid...Alexander Decker
This document summarizes a study that examines how ownership and board control structures function to achieve good corporate governance in developing countries, using four large quoted corporate organizations in Ghana as case studies. The study finds that these companies have large shareholders who wield extensive control through involvement in decision-making, helping to address principal-agent issues but potentially disadvantaging small shareholders. The study also finds that boards tend to exercise more control when major shareholders do not interfere, acting more as advisory bodies otherwise. It proposes that establishing audit and remuneration committees with independent directors as well as separating CEO and chairperson roles leads to more extensive board control.
Eyes on Hands off, The Ambiguous Role of Non-Executive Directors in Corporate...Ken Low
This paper investigates the relationship between non-executive directors (NEDs) and firm performance in top Malaysian companies. The study examines the relationship between firm performance and several corporate governance factors, including board size, proportion of NEDs, and NED remuneration. However, the study did not find significant correlations between these governance structures and firm performance. The inconclusive results suggest more analysis is needed to understand how corporate governance impacts performance in developing countries.
Corporate restructuring involves decisive measures to increase competitiveness and enhance enterprise value. It has helped thousands of organizations respond quickly to new opportunities and pressures, re-establishing competitive advantage. Indian law covers corporate restructuring through numerous acts regulating insolvency, mergers and acquisitions, taxation, and more. Major Indian restructurings include demergers of Larsen & Toubro and Reliance Industries, and cross-border mergers like Vodafone-Essar. Successful restructuring requires supportive legal frameworks, holistic strategies, integration planning, and addressing social costs.
The effects of corporate governance on company performance evidence from sri ...Alexander Decker
This document examines the relationship between corporate governance and company performance in Sri Lanka's financial services industry from 2008-2011. It reviews literature showing mixed results on relationships between governance factors like board size/composition and performance measures like return on assets/equity. The study analyzes 20 randomly selected banks/insurers, finding no significant relationships between governance variables and performance. This is consistent with prior Sri Lankan research finding corporate governance does not affect financial performance metrics.
This study aims to investigate the relationship between characteristics of board of directors as outlined in the Jordanian Corporate Governance Code and their effect on firm performance. Specifically, it will examine the role of the board of directors in enhancing performance by looking at factors like board independence, size, family membership, meetings, CEO duality, and nominations/compensation committees. The researchers hypothesize that there are positive relationships between these characteristics and firm performance based on prior literature. Good corporate governance is important as it can protect shareholders, manage resources, attract investors and capital, and improve performance.
Grant Thornton - Corporate Governance Review 2012Grant Thornton
Two decades have passed since the publication of the Cadbury Report which outlined a system for good corporate governance that still endures today. While business practice has evolved considerably over the last twenty years, with more than half of the FTSE 350 now complying with the UK Corporate Governance Code, challenges remain and practices continue to evolve.
The document provides a history of corporate governance in India and discusses its development over time. It begins by discussing ancient Indian governance concepts from Kautilya in the 3rd century BC that were strikingly modern. In the 19th century, state laws enhanced board governance rights. Studies have found that while India has strong investor protections on paper, enforcement is a problem due to slow courts and corruption. Corporate governance gained prominence in India in the 1990s and was introduced voluntarily before becoming mandatory in the early 2000s. Reforms are ongoing to develop appropriate solutions that address India-specific challenges efficiently.
Ey 2018-uk-corporate-governance-code-and-new-legislationKevin McCaffrey
The document summarizes key changes and requirements in the 2018 UK Corporate Governance Code and new related legislation. Some of the main points covered include:
- The 2018 Code places more emphasis on stakeholder engagement, workforce engagement, corporate culture and purpose.
- It introduces requirements around board diversity, succession planning, independence and overboarding.
- The role of the nomination committee is expanded around succession planning and reporting.
- New legislation requires companies to report on how they consider stakeholder interests, and include a CEO pay ratio and workforce engagement statement.
- Areas like chair tenure, independence criteria, and audit committee responsibilities saw some changes following consultation feedback.
- Listed companies will need to comply with
The document contains questions for three assignments on the topic of corporate governance. Assignment A contains 8 questions on various aspects of corporate governance like the role of codes, board of directors, committees, chairman roles, and recent developments. Assignment B describes a case study and asks questions about analyzing the situation of a company and proposing actions. Assignment C contains 40 multiple choice questions to test understanding of corporate governance terms, codes, and concepts.
The effects of corporate governance initiatives on ce performance in gl csHARRY ENTEBANG
This document discusses the effects of corporate governance initiatives on corporate entrepreneurship performance in government-linked companies (GLCs) in Malaysia. It suggests that while corporate governance is important, too much governance can negatively impact entrepreneurial activities in organizations. The study aims to investigate how corporate governance has influenced entrepreneurship in GLCs through content analysis of interviews. Prior to the Asian Financial Crisis, many large Asian firms ignored good governance, but governance reforms since then were intended to enhance shareholder value and firm performance. However, excessive governance controls may constrain corporate decision-making and entrepreneurship.
Environmental Accounting Reporting Practices of Listed pharmaceutical compani...Anamika Hore
1. The document discusses environmental accounting reporting practices of listed pharmaceutical companies in Bangladesh. It reviews literature on environmental accounting and reporting and examines prior studies on the topic.
2. The objective of the research is to determine if Bangladeshi pharmaceutical companies listed on the Dhaka Stock Exchange are following rules and disclosing environmental impacts as required.
3. The research will use content analysis to examine annual reports of selected pharmaceutical companies over a five year period to analyze their environmental accounting and reporting practices based on set categories. It aims to contribute to holding companies accountable for environmental pollution.
This document discusses the impact of corporate governance on company performance. It begins by defining corporate governance and outlining its four main pillars: accountability, fairness, transparency, and independence. It then presents the methodology used in a study analyzing the relationship between corporate governance implementation and financial metrics like net profit margin and earnings per share. The study found that companies with higher levels of corporate governance had higher profitability and stock performance. Therefore, the document concludes that better adherence to corporate governance principles positively influences company results.
Board diversity as positive factor for better corporateJamal Sait
The document discusses the benefits of having a diverse board of directors in terms of gender, age, and other factors. It notes that diversity can provide different perspectives and access to new resources and connections. Countries like Norway, France, and India have introduced quotas or requirements for having women on corporate boards to promote gender diversity. While diversity has advantages, it can also potentially lead to conflicts or slower decision-making if not managed properly. The conclusion emphasizes the importance of an inclusive leadership style that encourages contributions from all board members.
The document is a report analyzing the financial and governance transparency of Croda International Plc. It summarizes Croda's business operations, financial performance, and key governance mechanisms. The analysis finds that Croda complies with relevant codes of governance and financial reporting standards. While some of Croda's profitability ratios declined in 2014, the company remains profitable with adequate solvency. The report provides a comprehensive overview of Croda's finances, governance structures, and transparency.
Does corporate governance beget firm’s performance2Adeeldd
This research proposal aims to investigate the relationship between corporate governance practices and firm performance of Fortune 500 companies. The study will examine the impact of variables like board size, board independence, frequency of board meetings, presence of large shareholders, and CEO compensation on firm performance measures including return on assets, stock return, and Tobin's Q. Secondary data will be collected from 2004-2013 on a sample of 100 companies from the Fortune 500 list and multiple regression models will be used for analysis. The results could provide insights into governance practices that lead to better performance among major market players.
Understanding the Dynamics of Business Group Advantages and Affiliate Level A...inventionjournals
This paper explores the theory of the competitive advantages of business groups and their affiliates. The goal is to address the literature on emerging economies which remains short in providing the theoretical background on the nature of different types of emerging economy firms and their competitiveness. This research offers a theoretical framework on the specific competitive advantages of business groups and their affiliates. Some theoretical and practical implications are presented to elucidate the value of the paper towards our understanding on the growth and behavior of business groups.
This study investigates the impact of institutional ownership, and foreign ownership in determining the Palestinian firm performance. This study is based on panel data of 200 observationsfrom non-financial firms listed on the Palestine Security Exchange (PSE) during the period from 2009 to 2016.
Impact of corporate governance practices on firm capital structure and profit...Alexander Decker
This document summarizes a research study that investigated the relationship between corporate governance practices and capital structure and profitability among listed hotels and restaurant companies in Sri Lanka. The study examined relationships between board composition, board size, and CEO duality as corporate governance factors, and debt ratio, debt-to-equity ratio, return on equity, and return on assets as measures of capital structure and profitability. The results did not find any statistically significant relationships between the corporate governance and performance measures.
Accounting for goodwill is again controversial as International Accounting Standard Board adopts the impairment regime in 2004. Indeed, the adoption of impairment regime regarding Goodwill in accordance with IFRS makes the annual reports of companies more credible and transparent. However, the new treatment continues to receive criticism from the academics and practitioners, because they see the impairment regime is based on the discretion of management, and there is subjectivity inherent in the application of the impairment regime besides the conceptual move toward fair-value accounting. Hence, there is non-compliance with this standard in many companies around the world. However, the problem of agency and information asymmetry, which happen between companies‟ management and shareholders, can be decreased by external audit. This paper investigates the factors that may affect companies‟ compliance with the MFRS 136 Impairment of Assets among the Malaysian listed companies. Based on a review of the prior literature, this paper proposes a conceptual framework to investigate the impact of audit quality (audit firm size, audit tenure and audit fees) on the level of goodwill disclosure compliance with the MFRS 136 among Malaysian listed companies. Evidence from previous studies suggested that the audit quality proxy namely audit firm size, audit tenure and audit fees positively impact the companies‟ compliance with the MFRS 136.
The document summarizes a case study on strategic planning for Hamadan Glass Company in Iran. Researchers conducted SWOT and QSPM analyses to formulate strategies. Key strengths included research capabilities and modern equipment, while weaknesses were low liquidity and lack of expert staff. Opportunities included domestic sourcing and high shipping costs, while threats included competition and potential sanctions. The analyses resulted in strategies like establishing new production lines and cooperating with transportation companies to address weaknesses and threats by leveraging strengths and opportunities.
Models of Corporate Governance
CORPORATE GOVERNANCE SYSTEMS
Efforts made for Effective Corporate Governance
Cadbury Committee
Sarbanes Oxley Act, 2002
Global Corporate Governance
External Auditor
Trends in Governance in Major MNC’s
India
China
Japan
Other European Model
Presentation at Insurance and Pension Authority/Commonwealth Secretariat Seminar on Corporate Governance of Insurance Companies March 2012 Livingstone Zambia
Ownership and control in corporate organisations in developing countries evid...Alexander Decker
This document summarizes a study that examines how ownership and board control structures function to achieve good corporate governance in developing countries, using four large quoted corporate organizations in Ghana as case studies. The study finds that these companies have large shareholders who wield extensive control through involvement in decision-making, helping to address principal-agent issues but potentially disadvantaging small shareholders. The study also finds that boards tend to exercise more control when major shareholders do not interfere, acting more as advisory bodies otherwise. It proposes that establishing audit and remuneration committees with independent directors as well as separating CEO and chairperson roles leads to more extensive board control.
Eyes on Hands off, The Ambiguous Role of Non-Executive Directors in Corporate...Ken Low
This paper investigates the relationship between non-executive directors (NEDs) and firm performance in top Malaysian companies. The study examines the relationship between firm performance and several corporate governance factors, including board size, proportion of NEDs, and NED remuneration. However, the study did not find significant correlations between these governance structures and firm performance. The inconclusive results suggest more analysis is needed to understand how corporate governance impacts performance in developing countries.
Corporate restructuring involves decisive measures to increase competitiveness and enhance enterprise value. It has helped thousands of organizations respond quickly to new opportunities and pressures, re-establishing competitive advantage. Indian law covers corporate restructuring through numerous acts regulating insolvency, mergers and acquisitions, taxation, and more. Major Indian restructurings include demergers of Larsen & Toubro and Reliance Industries, and cross-border mergers like Vodafone-Essar. Successful restructuring requires supportive legal frameworks, holistic strategies, integration planning, and addressing social costs.
The effects of corporate governance on company performance evidence from sri ...Alexander Decker
This document examines the relationship between corporate governance and company performance in Sri Lanka's financial services industry from 2008-2011. It reviews literature showing mixed results on relationships between governance factors like board size/composition and performance measures like return on assets/equity. The study analyzes 20 randomly selected banks/insurers, finding no significant relationships between governance variables and performance. This is consistent with prior Sri Lankan research finding corporate governance does not affect financial performance metrics.
This study aims to investigate the relationship between characteristics of board of directors as outlined in the Jordanian Corporate Governance Code and their effect on firm performance. Specifically, it will examine the role of the board of directors in enhancing performance by looking at factors like board independence, size, family membership, meetings, CEO duality, and nominations/compensation committees. The researchers hypothesize that there are positive relationships between these characteristics and firm performance based on prior literature. Good corporate governance is important as it can protect shareholders, manage resources, attract investors and capital, and improve performance.
Grant Thornton - Corporate Governance Review 2012Grant Thornton
Two decades have passed since the publication of the Cadbury Report which outlined a system for good corporate governance that still endures today. While business practice has evolved considerably over the last twenty years, with more than half of the FTSE 350 now complying with the UK Corporate Governance Code, challenges remain and practices continue to evolve.
The document provides a history of corporate governance in India and discusses its development over time. It begins by discussing ancient Indian governance concepts from Kautilya in the 3rd century BC that were strikingly modern. In the 19th century, state laws enhanced board governance rights. Studies have found that while India has strong investor protections on paper, enforcement is a problem due to slow courts and corruption. Corporate governance gained prominence in India in the 1990s and was introduced voluntarily before becoming mandatory in the early 2000s. Reforms are ongoing to develop appropriate solutions that address India-specific challenges efficiently.
Ey 2018-uk-corporate-governance-code-and-new-legislationKevin McCaffrey
The document summarizes key changes and requirements in the 2018 UK Corporate Governance Code and new related legislation. Some of the main points covered include:
- The 2018 Code places more emphasis on stakeholder engagement, workforce engagement, corporate culture and purpose.
- It introduces requirements around board diversity, succession planning, independence and overboarding.
- The role of the nomination committee is expanded around succession planning and reporting.
- New legislation requires companies to report on how they consider stakeholder interests, and include a CEO pay ratio and workforce engagement statement.
- Areas like chair tenure, independence criteria, and audit committee responsibilities saw some changes following consultation feedback.
- Listed companies will need to comply with
The document contains questions for three assignments on the topic of corporate governance. Assignment A contains 8 questions on various aspects of corporate governance like the role of codes, board of directors, committees, chairman roles, and recent developments. Assignment B describes a case study and asks questions about analyzing the situation of a company and proposing actions. Assignment C contains 40 multiple choice questions to test understanding of corporate governance terms, codes, and concepts.
The effects of corporate governance initiatives on ce performance in gl csHARRY ENTEBANG
This document discusses the effects of corporate governance initiatives on corporate entrepreneurship performance in government-linked companies (GLCs) in Malaysia. It suggests that while corporate governance is important, too much governance can negatively impact entrepreneurial activities in organizations. The study aims to investigate how corporate governance has influenced entrepreneurship in GLCs through content analysis of interviews. Prior to the Asian Financial Crisis, many large Asian firms ignored good governance, but governance reforms since then were intended to enhance shareholder value and firm performance. However, excessive governance controls may constrain corporate decision-making and entrepreneurship.
Environmental Accounting Reporting Practices of Listed pharmaceutical compani...Anamika Hore
1. The document discusses environmental accounting reporting practices of listed pharmaceutical companies in Bangladesh. It reviews literature on environmental accounting and reporting and examines prior studies on the topic.
2. The objective of the research is to determine if Bangladeshi pharmaceutical companies listed on the Dhaka Stock Exchange are following rules and disclosing environmental impacts as required.
3. The research will use content analysis to examine annual reports of selected pharmaceutical companies over a five year period to analyze their environmental accounting and reporting practices based on set categories. It aims to contribute to holding companies accountable for environmental pollution.
This document discusses the impact of corporate governance on company performance. It begins by defining corporate governance and outlining its four main pillars: accountability, fairness, transparency, and independence. It then presents the methodology used in a study analyzing the relationship between corporate governance implementation and financial metrics like net profit margin and earnings per share. The study found that companies with higher levels of corporate governance had higher profitability and stock performance. Therefore, the document concludes that better adherence to corporate governance principles positively influences company results.
Board diversity as positive factor for better corporateJamal Sait
The document discusses the benefits of having a diverse board of directors in terms of gender, age, and other factors. It notes that diversity can provide different perspectives and access to new resources and connections. Countries like Norway, France, and India have introduced quotas or requirements for having women on corporate boards to promote gender diversity. While diversity has advantages, it can also potentially lead to conflicts or slower decision-making if not managed properly. The conclusion emphasizes the importance of an inclusive leadership style that encourages contributions from all board members.
The document is a report analyzing the financial and governance transparency of Croda International Plc. It summarizes Croda's business operations, financial performance, and key governance mechanisms. The analysis finds that Croda complies with relevant codes of governance and financial reporting standards. While some of Croda's profitability ratios declined in 2014, the company remains profitable with adequate solvency. The report provides a comprehensive overview of Croda's finances, governance structures, and transparency.
Does corporate governance beget firm’s performance2Adeeldd
This research proposal aims to investigate the relationship between corporate governance practices and firm performance of Fortune 500 companies. The study will examine the impact of variables like board size, board independence, frequency of board meetings, presence of large shareholders, and CEO compensation on firm performance measures including return on assets, stock return, and Tobin's Q. Secondary data will be collected from 2004-2013 on a sample of 100 companies from the Fortune 500 list and multiple regression models will be used for analysis. The results could provide insights into governance practices that lead to better performance among major market players.
Understanding the Dynamics of Business Group Advantages and Affiliate Level A...inventionjournals
This paper explores the theory of the competitive advantages of business groups and their affiliates. The goal is to address the literature on emerging economies which remains short in providing the theoretical background on the nature of different types of emerging economy firms and their competitiveness. This research offers a theoretical framework on the specific competitive advantages of business groups and their affiliates. Some theoretical and practical implications are presented to elucidate the value of the paper towards our understanding on the growth and behavior of business groups.
This study investigates the impact of institutional ownership, and foreign ownership in determining the Palestinian firm performance. This study is based on panel data of 200 observationsfrom non-financial firms listed on the Palestine Security Exchange (PSE) during the period from 2009 to 2016.
Impact of corporate governance practices on firm capital structure and profit...Alexander Decker
This document summarizes a research study that investigated the relationship between corporate governance practices and capital structure and profitability among listed hotels and restaurant companies in Sri Lanka. The study examined relationships between board composition, board size, and CEO duality as corporate governance factors, and debt ratio, debt-to-equity ratio, return on equity, and return on assets as measures of capital structure and profitability. The results did not find any statistically significant relationships between the corporate governance and performance measures.
Accounting for goodwill is again controversial as International Accounting Standard Board adopts the impairment regime in 2004. Indeed, the adoption of impairment regime regarding Goodwill in accordance with IFRS makes the annual reports of companies more credible and transparent. However, the new treatment continues to receive criticism from the academics and practitioners, because they see the impairment regime is based on the discretion of management, and there is subjectivity inherent in the application of the impairment regime besides the conceptual move toward fair-value accounting. Hence, there is non-compliance with this standard in many companies around the world. However, the problem of agency and information asymmetry, which happen between companies‟ management and shareholders, can be decreased by external audit. This paper investigates the factors that may affect companies‟ compliance with the MFRS 136 Impairment of Assets among the Malaysian listed companies. Based on a review of the prior literature, this paper proposes a conceptual framework to investigate the impact of audit quality (audit firm size, audit tenure and audit fees) on the level of goodwill disclosure compliance with the MFRS 136 among Malaysian listed companies. Evidence from previous studies suggested that the audit quality proxy namely audit firm size, audit tenure and audit fees positively impact the companies‟ compliance with the MFRS 136.
The document summarizes a case study on strategic planning for Hamadan Glass Company in Iran. Researchers conducted SWOT and QSPM analyses to formulate strategies. Key strengths included research capabilities and modern equipment, while weaknesses were low liquidity and lack of expert staff. Opportunities included domestic sourcing and high shipping costs, while threats included competition and potential sanctions. The analyses resulted in strategies like establishing new production lines and cooperating with transportation companies to address weaknesses and threats by leveraging strengths and opportunities.
Similar to Brennan, Niamh and McCafferty, Jacqueline [1997] Corporate Governance Practices in Irish Companies, IBAR – Irish Business and Administrative Research 18: 116-135.
Models of Corporate Governance
CORPORATE GOVERNANCE SYSTEMS
Efforts made for Effective Corporate Governance
Cadbury Committee
Sarbanes Oxley Act, 2002
Global Corporate Governance
External Auditor
Trends in Governance in Major MNC’s
India
China
Japan
Other European Model
Presentation at Insurance and Pension Authority/Commonwealth Secretariat Seminar on Corporate Governance of Insurance Companies March 2012 Livingstone Zambia
This document discusses corporate governance in India. It begins by providing context on the state of corporate governance in India prior to reforms, noting issues like managing agency systems, licensing requirements, corruption, and ineffective oversight. It then discusses current weaknesses in corporate governance in India, including related party transactions, board independence, and enforcement. The document concludes by recommending improvements like increasing board independence, separating CEO and chairperson roles, strengthening shareholder rights and enforcement, and improving transparency and disclosure.
This document discusses corporate governance in India. It notes that in the decades after independence, India adopted socialist policies that stifled corporate growth and bred corruption. The situation deteriorated further as tax rates encouraged creative accounting and DFIs provided loans but had little oversight over companies. Overall, corporate governance was weak in India with non-transparent practices and a lack of accountability.
This document discusses corporate governance issues and scandals that have arisen from failures of corporate management. It provides examples of major scandals from companies like WorldCom, Enron, Waste Management, and Tyco that misstated earnings and had accounting fraud. It then discusses the evolution of corporate governance in response to these scandals, including reports and standards from organizations like OECD, Cadbury, Greenbury, and the Sarbanes-Oxley Act. Finally, it outlines the roles and responsibilities of boards of directors in corporate strategy and governance.
A review of corporate governance codes and best practices inAlexander Decker
The document summarizes the development of corporate governance codes and best practices in the UK and Nigeria. It describes how the UK began developing corporate governance standards in the 1990s in response to corporate scandals, establishing several committees that produced codes covering board responsibilities, remuneration, and shareholder relations. The UK codes are voluntary but require disclosure of noncompliance. In contrast, Nigeria lacks regular review and updating of its corporate governance mechanisms to meet global best practices.
A review of corporate governance codes and best practices inAlexander Decker
This document provides an overview of corporate governance codes and best practices in Nigeria and the UK. It summarizes the development of codes in the UK since the 1990s in response to corporate scandals, with regular reviews and updates. It notes Nigeria lacks similar regular reviews and updates. The document then details some of Nigeria's industry-specific corporate governance codes but notes they have shortcomings and are not regularly reviewed unlike in the UK. It concludes by advocating Nigeria should review and update its standards to meet global best practices.
All organizations have a purpose and want to be successful in attaining that purpose which why many are recognizing the importance of corporate governance and of having someone responsible for it within their organization. The article unfolds such a goldmine of opportunities of providing services under corporate governance and at the same time given a perspective of the concept at both national and international level.
Golden opportunities under corporate governancetaxguru4
Like in any family there are unwritten rules for good bonding between members, the corporate governance is all about a system of direction, feedback, and control using regulations and ethical guidelines meeting societal expectations. The word governance is derived from the word ‘gubernate’, which means to steer. Thus, Corporate govern...
corporate governance related to ethic topicsManish Tiwari
The document summarizes the development and journey of corporate governance. It discusses key concepts like corporate governance principles, ethics and values in large companies. It then covers the history of corporate governance in India and emergence of new values in business. Examples of proper and improper corporate governance are provided, along with consequences of each. Various corporate governance related committees and their recommendations are outlined. Finally, the important role of ethics in government policies and laws is discussed.
MacCanna, Leo, Brennan, Niamh and O’Higgins, Eleanor [1999] National Networks...Prof Niamh M. Brennan
This paper maps the network of interlocking directorships formed by the boards of the top 50 financial and 200 non-financial companies in Ireland. The Irish network is compared with those in ten countries, based on the same sample size and selection criteria as used in this paper, using the methods and theory of Social Network Analysis (SNA). Fundamental to the paper is the idea that the network of interlocking directorates is in some way structured, and not the result of random processes.
Irish boards were found to have a relatively loose connected network structure which is sparser and less dense than those of other countries. This is reflected in the relatively low percentage of multiple directors and the relatively fewer number of directorships per multiple director.
In general, indigenous Irish public companies tended to be central in the network, while a disproportionately large number of foreign and private companies were isolated on the periphery. However, a number of foreign-owned companies were central to the network - in particular, those which started as indigenous Irish companies which were subsequently taken over.
When account is taken of the nature of the Irish economy and business in comparison with that of the ten other countries, it is seen that the opportunities for company interlinking at board level in Ireland are relatively fewer. However, within these constraints, there is a thriving network of corporate power in Ireland.
Brennan, Niamh and McDermott, Michael [2004] Alternative Perspectives on Inde...Prof Niamh M. Brennan
This paper examines the issue of independence of boards of directors and non-executive direc¬tors of companies listed on the Irish Stock Exchange. Based on information published in annual reports, the study found that most Irish listed companies were complying with the Combined Code’s recommendations for a balanced board structure, albeit with only 60 per cent having majority-independent boards. The study found a lack of consistency in inter-preting the definition of “independence”, a lack of disclosure of information and, by apply¬ing criteria generally regarded as prerequisite to independence of non-executive directors, certain situations which imposed upon their independence.
This document provides an overview of corporate governance and discusses key concepts and examples. It begins by defining corporate governance as the rules, processes and practices by which a company is directed and controlled. It then examines corporate governance practices in both the UK and US, highlighting the UK Corporate Governance Code and the Sarbanes-Oxley Act passed in response to scandals like Enron. Examples like the Robert Maxwell and Enron scandals are discussed to showcase how weaknesses in governance can be exploited. The document concludes by outlining essential topics to explore in the next lecture such as the effectiveness of current governance structures.
Over the past two decades, many corporate scandals have occurred due to failures of governance. Company managers prioritized short-term earnings over ethics and long-term goals. Boards failed to provide effective oversight, allowing improper accounting practices. Scandals like Enron and Worldcom led to reforms like the Sarbanes-Oxley Act of 2002 and new codes focused on transparency, board accountability, and auditor independence. International initiatives like the OECD Principles of Corporate Governance and Cadbury Report also aimed to strengthen governance and protect shareholder rights.
Notes of Module 5 Corporate Governance
Content
Concept of Corporate Governance
Corporate Governance in India
Objective of Corporate Governance
Features of Corporate Governance
Elements of Corporate Governance
Importance of Corporate Governance
Important Issues in Corporate Governance
Corporate Governance and Agency Theory
Reforming Board of Directors
*Birla Committee
*Naresh Candra Committee
*Narayana Murthy Committee
Bibliography
www.google.com
related materials
The Combined Code is the primary document outlining principles of corporate governance in the UK. It consolidates recommendations from several earlier reports, including the Cadbury, Greenbury, Hampel, Turnbull, Higgs, and Smith Reports. These reports responded to corporate scandals and provided guidance on board responsibilities and composition, executive compensation, internal controls, audit functions, and shareholder rights. The Combined Code establishes 14 governance principles and is updated annually with new recommendations to maintain best practices.
This document provides an overview of the methodology used in a study examining the relationship between ownership concentration, corporate governance, and firm performance in Indian companies. The study uses data from 500 companies listed on the S&P CNX index over 3 years. It examines how the nature of the dominant shareholder and promoter shareholding impact firm performance and corporate governance. The corporate governance variables studied are board structure, auditor independence, and related party transactions. The study tests hypotheses about the influence of these ownership and governance factors on financial performance measures like Tobin's Q and return on assets. It aims to determine whether the dominant shareholder or promoter shareholding moderate the impact of governance on performance. Control variables like firm size, age, leverage, and
The document summarizes several major codes on corporate governance from the UK and internationally. It begins by discussing the 1992 Cadbury Committee report from the UK, which was commissioned after several business failures and established a Code of Best Practice for board structure and responsibilities. It also made recommendations regarding auditors and shareholder rights. The OECD later issued principles in 1999 focused on shareholder rights, equitable treatment, stakeholder rights, transparency and board responsibilities. Additionally, the US passed the Sarbanes-Oxley Act in 2002 to increase investor confidence through provisions regarding certification of financial statements, assessment of internal controls, restrictions on loans to executives, protection of whistleblowers and establishment of audit committees.
The document discusses codes of ethics and professional conduct for organizations. It provides definitions for codes of ethics and codes of conduct, explaining that codes of ethics aim to provide moral guidance for professionals while codes of conduct establish more specific rules and enforcement mechanisms. The document also discusses best practices standards which are meant to set industry-wide benchmarks for behavior. Several examples of standards for ethical accounting, labor practices, and sustainability reporting are provided.
Similar to Brennan, Niamh and McCafferty, Jacqueline [1997] Corporate Governance Practices in Irish Companies, IBAR – Irish Business and Administrative Research 18: 116-135. (20)
Brennan, Niamh and Clarke, Peter [1985] Objective Tests in Financial Accounti...Prof Niamh M. Brennan
A multiple choice questionnaire (MCQ) style examination typically consists of 20/30 short statements, each of which is followed by a number of alternative answers. Only one answer is strictly correct. This allows the examiner to mark candidates' responses in an objective rather than subjective fashion. This style of examination question has recently been adopted by the Institute of Chartered Accountants in Ireland and is also used in third level institutions.
MCQs have a number of advantages over traditional examination formats. First, they allow the examiner to ask questions on every topic on the syllabus and thus test the candidates range of knowledge. Perhaps more importantly, correction of answers is entirely objective and comparatively easy. Large numbers of scripts can be objectively tested in a short space of time.
Objective tests can also be an effective teaching tool. The topics covered in each chapter are logically sequenced so that as the student progresses through the chapter they build up their know¬ledge and skills in relation to that topic. In addition, the book emphasises problem areas and attempts to help students avoid common mistakes in financial accounting. Thus the tutor can indicate the correct solution and also explain or seek responses as to why other plausible answers are incorrect to the given statement. Such a process should ensure greater understanding of the topic under discussion.
This book is suitable for students taking introductory financial accounting examinations of the professional accountancy bodies, third level accounting students or other students studying introductory financial accounting courses. The three revision examinations at the end of this book are reproduced with the kind permission of the Institute of Chartered Accountants in Ireland.
03 14 brennan merkl davies accounting narratives and impression managementProf Niamh M. Brennan
This chapter examines impression management in accounting communication through four theoretical perspectives: economic, psychological, sociological, and critical. Impression management refers to organizations constructing impressions to appeal to audiences like shareholders and stakeholders. Discretionary accounting narratives in corporate reports are analyzed for seven communication choices that could constitute impression management. The chapter concludes by discussing implications for corporate reporting practice and suggestions for future research on how impression management may undermine reporting quality and influence stakeholder perceptions.
Brennan, Niamh M., Merkl-Davies, Doris M., and Beelitz, Annika [2013] Dialogi...Prof Niamh M. Brennan
We conceptualise CSR communication as a process of reciprocal influence between organisations and their audiences. We use an illustrative case study in the form of a conflict between firms and a powerful stakeholder which is played out in a series of 20 press releases over a two-month period to develop a framework of analysis based on insights from linguistics. It focuses on three aspects of dialogism, namely (i) turn-taking (co-operating in a conversation by responding to the other party), (ii) inter-party moves (the nature and type of interaction action characterising a turn i.e., denial, apology, excuse), and (iii) intertextuality (the intensity and quality of verbal interaction between the parties). We address the question: What is the nature and type of verbal interactions between the parties? First we examine (a) whether the parties verbally interact and then (b) whether the parties listen to each other.
We find evidence of dialogism suggesting that CSR communication is an interactive process which has to be understood as a function of the power relations between a firm and a specific stakeholder. Also, we find evidence of intertextuality in the press releases by the six firms which engage in verbal interaction with the stakeholder. We interpret this as linguistic evidence of isomorphic processes relating to CSR practices resulting from the pressure exerted by a powerful stakeholder. The lack of response by ten firms that fail to issue press releases suggests a strategy of ‘watch-and-wait’ with respect to the outcome of the conflict.
Brennan, Niamh M. and Flynn, Maureen A. [2013] Differentiating Clinical Gover...Prof Niamh M. Brennan
This document proposes new definitions to distinguish between clinical governance, clinical management, and clinical practice. It analyzes 29 existing definitions of "clinical governance" and finds they confuse governance, management, and practice roles. The document suggests 3 new separate definitions: clinical governance focuses on accountability, oversight, and setting standards; clinical management focuses on efficient service delivery through processes and resources; and clinical practice focuses on delivering high-quality care. Clearer distinctions between these roles could help implement clinical governance more effectively.
Brennan, Niamh M. and Conroy, John P. [2013] Executive Hubris: The Case of a ...Prof Niamh M. Brennan
Purpose – Can personality traits of Chief Executive Officers (CEOs) be detected at-a-distance? Following newspaper speculation that the banking crisis of 2008 was partly caused by CEO hubris, this paper analyses the CEO letters to shareholders of a single bank over ten years for evidence of CEO personality traits, including: (i) narcissism (a contributor to hubris), (ii) hubris, (iii) overconfidence and (iv) CEO-attribution. Following predictions that hubris increases the longer individuals occupy positions of power, the research examines whether hubristic characteristics intensify over time.
Design/methodology/approach – This paper takes concepts of hubris from the clinical psychology literature and applies them to discourses in CEO letters to shareholders in annual reports. The research comprises a longitudinal study of the discretionary narrative disclosures in the CEO letters to shareholders in eight annual reports, benchmarked against disclosures in the CEO letters to shareholders of the previous and subsequent CEOs of the same organisation.
Findings – Results point to evidence of narcissism and hubris in the personality of the Bank CEO. Over half the sentences analysed were found to contain narcissistic-speak. In 45% of narcissistic-speak sentences, there were three of more symptoms of hubris – what Owen and Davison (2009) describe as extreme hubristic behavior. In relation to CEO overconfidence, only seven (2%) sentences contained bad news. More than half of the good news was attributed to the CEO and all the bad news was attributed externally. The research thus finds evidence of hubris in the CEO letters to shareholders, which became more pronounced the longer the CEO served.
Research limitations/implications – The analysis of CEO discourse is highly subjective, and difficult to replicate.
Originality/value – The primary contribution of this research is the adaptation of the 14 clinical symptoms of hubris from clinical psychology to the analysis of narratives in CEO letters to shareholders in annual reports to reveal signs of CEO hubris.
Craig, Russell J. and Brennan, Niamh M. [2012] An Exploration of the Relation...Prof Niamh M. Brennan
This paper proposes a taxonomy to assist in more clearly locating research on aspects of the association between corporate reputation and corporate accountability reporting. We illustrate how our proposed taxonomy can be applied by using it to frame our exploration of the relationship between measures of reputation and characteristics of the language choices made in CEO letters to shareholders. Using DICTION 5.0 software we analyse the content of the CEO letters of 23 high reputation US firms and 23 low reputation US firms. Our results suggest that company size and visibility each have a positive influence on the extent to which corporate reputation is associated with the language choices made in CEO letters. These results, which are anomalous when compared with those of Geppert and Lawrence (2008), highlight the need for caution when assessing claims about the effects on corporate reputation arising from the language choice in narratives in corporate annual reports.
Merkl-Davies and Brennan A Conceptual Framework of Impression Management: New...Prof Niamh M. Brennan
In this paper we develop a conceptual framework, based on the concepts of rationality and motivation, which uses theories and empirical research from psychology/behavioural finance, sociology and critical accounting to systematise, advance and challenge research on impression management. The paper focuses on research which departs from economic concepts of impression management as opportunistic managerial discretionary disclosure behaviour resulting in reporting bias or as ‘cheap talk’. Using alternative rationality assumptions, such as bounded rationality, irrationality, substantive rationality and the notion of rationality as a social construct, we conceptualise impression management in alternative ways as (i) self-serving bias, (ii) symbolic management and (iii) accounting rhetoric. This contributes to an enhanced understanding of impression management in a corporate reporting context.
Brennan, Niamh [1996] Disclosure of Profit Forecasts during Takeover Bids. Do...Prof Niamh M. Brennan
This thesis examines disclosure of 250 profit forecasts in 701 UK takeover bids in the period 1988 to 1992 against five research issues:
• Factors influencing disclosure of forecasts
• Influence of prevailing market expectations
• Effect of disclosure of forecasts on the outcome of bids
• Factors influencing disclosure content in forecasts
• Whether forecasts disclosed convey good news
Logit analysis and negative binomial regression are the two primary statistical techniques used to analyse the results.
Results show the domination of the takeover-context of the research. Two variables accounted for almost all the influence on disclosure of forecasts for both bidders and targets: bid horizon and type of bid. Probability of disclosure of a forecast is greater the shorter the bid horizon and during contested bids.
In addition to bid horizon and type of bid, for bidders, year, value of bid and purchase consideration were significant, and for targets value of bid and industry were significant in one of the two models estimated.
Evidence supporting the hypothesis that forecast disclosure is more likely when market expectations are out of line with actual results is provided.
There is some evidence that forecasts by targets affect the outcome of bids, but there is no such evidence for bidders.
Takeover-context variables and forecast-related variables were most relevant in determining disclosures in forecasts. Disclosure content in forecasts was significantly greater during contested bids, in voluntary forecasts and in longer period forecasts. Significantly more assumptions were disclosed by target forecasters and in longer horizon forecasts.
Evidence shows a tendency to disclose good news, with some disclosure of bad news. Good news forecasts are more likely during contested bids. Targets are more likely to disclose bad news forecasts, but when bidders disclose bad news it tends to be worse on average than targets’ bad news.
Merkl-Davies, Doris M., Brennan, Niamh M. and McLeay, Stuart J. [2011] Impres...Prof Niamh M. Brennan
Purpose – Prior accounting research views impression management predominantly though the lens of economics. Drawing on social psychology research, we provide a complementary perspective on corporate annual narrative reporting as characterised by conditions of ‘ex post accountability’ (Aerts, 2005, p. 497). These give rise to (i) impression management resulting from the managerial anticipation of the feedback effects of information and/or to (ii) managerial sense-making by means of the retrospective framing of organisational outcomes.
Design/methodology/approach – We use a content analysis approach pioneered by psychology research (Newman et al., 2003) which is based on the psychological dimension of word use to investigate the chairmen’s statements of 93 UK listed companies.
Findings – Results suggest that firms do not use chairmen’s statements to create an impression at variance with an overall reading of the annual report. We find that negative organisational outcomes prompt managers to engage in retrospective sense-making, rather than to present a public image of organisational performance inconsistent with the view internally held by management (self-presentational dissimulation). Further, managers of large firms use chairmen’s statements to portray an accurate (i.e., consistent with an overall reading of the annual report), albeit favourable, image of the firm and of organisational outcomes (i.e., impression management by means of enhancement).
Research limitations – The content analysis approach adopted in the study analyses words out of context.
Practical implications – Corporate annual reporting may not only be understood from a behavioural perspective involving managers responding to objectively determined stimuli inherent in the accountability framework, but also from a symbolic interaction perspective which involves managers retrospectively making sense of organisational outcomes and events.
Originality/value – Our approach allows us to investigate three complementary scenarios of managerial corporate annual reporting behaviour: (i) self-presentational dissimulation, (ii) impression management by means of enhancement, and (iii) retrospective sense-making.
Brennan, Niamh M., Daly, Caroline A. and Harrington, Claire S. [2010] Rhetori...Prof Niamh M. Brennan
This exploratory study extends the analysis of narrative disclosures from routine reporting contexts such as annual reports and press releases to non-routine takeover documents where the financial consequences of narrative disclosures can be substantial. Rhetoric and argument in the form of impression management techniques in narrative disclosures are examined. Prior thematic content analysis methods for analysing good and bad news disclosures are adapted to the attacking and defensive themes in the defence documents of target companies subject to hostile takeover bids. The paper examines the incidence, extent and implications of impression management in ten hostile takeover defence documents issued by target companies listed on the London Stock Exchange between 1 January 2006 and 30 June 2008. Three impression management strategies – thematic, visual and rhetorical manipulation – are investigated using content analysis methodologies. The findings of the research indicate that thematic, visual and rhetorical manipulation is evident in hostile takeover defence documents. Attacking and defensive sentences were found to comprise the majority of the defence documents analysed. Such sentences exhibited varying degrees of visual and rhetorical emphasis, which served to award greater or lesser degrees of prominence to the information conveyed by target company management.
While exploratory in nature, this paper concludes with suggestions for future more systematic research allowing for greater generalisations from the findings.
Brennan, Niamh M., Guillamon-Saorin, Encarna and Pierce, Aileen [2009] Impres...Prof Niamh M. Brennan
Purpose – This paper develops a holistic measure for analysing impression management and for detecting bias introduced into corporate narratives as a result of impression management.
Design/methodology/approach – Prior research on the seven impression management methods in the literature is summarised. Four of the less-researched methods are described in detail, and are illustrated with examples from UK Annual Results’ Press Releases (ARPRs). A method of computing a holistic composite impression management score based on these four impression management methods is developed, based on both quantitative and qualitative data in corporate narrative disclosures. An impression management bias score is devised to capture the extent to which impression management introduces bias into corporate narratives. An example of the application of the composite impression management score and impression management bias score methodology is provided.
Findings – While not amounting to systematic evidence, the 21 illustrative examples suggest that impression management is pervasive in corporate financial communications using multiple impression management methods, such that positive information is exaggerated, while negative information is either ignored or is underplayed.
Originality/value – Four impression management methods are described in detail, illustrated by 21 examples. These four methods are examined together. New impression management methods are studied in this paper for the first time. This paper extends prior impression management measures in two ways. First, a composite impression management score based on four impression management techniques is articulated. Second, the composite impression management score methodology is extended to capture a measure for bias, in the form of an impression management bias score. This is the first time outside the US that narrative disclosures in press releases have been studied.
Brennan, Niamh M. and Solomon, Jill [2008] Corporate Governance, Accountabili...Prof Niamh M. Brennan
Purpose – This paper reviews traditional corporate governance and accountability research, to suggest opportunities for future research in this field. The first part adopts an analytical frame of reference based on theory, accountability mechanisms, methodology, business sector/context, globalisation and time horizon. The second part of the paper locates the seven papers in the special issue in a framework of analysis showing how each one contributes to the field. The paper presents a frame of reference which may be used as a 'roadmap' for researchers to navigate their way through the prior literature and to position their work on the frontiers of corporate governance research.
Design/methodology/approach – The paper employs an analytical framework, and is primarily discursive and conceptual.
Findings – The paper encourages broader approaches to corporate governance and accountability research beyond the traditional and primarily quantitative approaches of prior research. Broader theoretical perspectives, methodological approaches, accountability mechanism, sectors/contexts, globalisation and time horizons are identified.
Research limitations/implications – Greater use of qualitative research methods are suggested, which present challenges particularly of access to the “black box” of corporate boardrooms.
Originality/value – Drawing on the analytical framework, and the papers in the special issue, the paper identifies opportunities for further research of accountability and corporate governance.
Merkl-Davies, Doris M. and Brennan, Niamh M. [2007] Discretionary Disclosure ...Prof Niamh M. Brennan
This paper reviews and synthesizes the literature on discretionary narrative disclosures. We explore why, how, and whether preparers of corporate narrative reports use discretionary disclosures in corporate narrative documents and why, how, and whether users react thereto. To facilitate the review, we provide three taxonomies based on: the motivation for discretionary narrative disclosures (opportunistic behavior, i.e. impression management, versus provision of useful incremental information); the research perspective (preparer versus user); and seven discretionary disclosure strategies.
Brennan, Niamh M. and McGrath, Mary [2007] Financial Statement Fraud: Inciden...Prof Niamh M. Brennan
This document summarizes a research paper that studied 14 cases of financial statement fraud from the US and Europe. It found that senior management was usually responsible, and the most common method of fraud was recording false sales to meet external earnings forecasts. Fraud was typically discovered by management, either existing or new management taking over.
Brennan, Niamh and Kelly, John [2007] A Study of Whistleblowing Among Trainee...Prof Niamh M. Brennan
Over the last number of years whistleblowers have been gaining prominence. This paper investigates some of the factors that influence the propensity or willingness to blow the whistle among trainee auditors. Three categories of factors are examined: audit firm organisational structures, personal characteristics of whistleblowers and situational variables.
A survey of 240 final year students of the Institute of Chartered Accountants in Ireland was undertaken. Trainee auditors (just about to sit their finals) were asked about their confidence in internal and external reporting structures in their firms. Using four scenarios, audit trainees were questioned on their willingness to challenge an audit partner’s inappropriate response to concerns raised during the audit. Finally, audit trainees were asked about the influence of legal protection on their likelihood of whistleblowing.
Results indicate that where firms have adequate formal structures for reporting wrongdoing, trainee auditors are more likely to report wrongdoing and have greater confidence that this will not adversely affect their careers. Training increases this confidence. Trainee auditors also express a willingness to challenge an audit partner’s unsatisfactory response to wrongdoing. Significant differences were found in attitudes depending on whether the reports of wrongdoing were internal or external. The willingness to report wrongdoing externally reduces for older (aged over 25) trainees.
Brennan, Niamh [2006] Boards of Directors and Firm Performance: Is there an E...Prof Niamh M. Brennan
Reflecting investor expectations, most prior corporate governance research attempts to find a relationship between boards of directors and firm performance. This paper critically examines the premise on which this research is based. An expectations gap approach is applied for the first time to implicit expectations which assume a relationship between firm performance and company boards. An expectations gap has two elements: A reasonableness gap and a performance gap. Seven aspects of boards are identified as leading to a reasonableness gap. Five aspects of boards are identified as leading to a performance gap. The paper concludes by suggesting avenues for empirically testing some of the concepts discussed in this paper.
Brennan, Niamh and Gray, Sidney J. [2005] The Impact of Materiality: Accounti...Prof Niamh M. Brennan
This paper comprises a review of the literature on materiality in accounting. The paper starts by examining the context in which materiality is relevant, and the problems arising from applying the concept in practice. Definitions of materiality from legal, accounting and stock exchange sources are compared. The relevance of materiality to various accounting situations is discussed. Methods of calculating quantitative thresholds are described and illustrated. Prior research is reviewed, focussing on materiality thresholds, and on the materiality judgments of auditors, preparers and financial statement users. The paper concludes with some suggestions for future research and for policy makers concerning this best kept accounting secret.
Brennan, Niamh [2005] Accounting Expertise in Litigation and Dispute Resoluti...Prof Niamh M. Brennan
This document summarizes the role of expert witnesses in litigation, with a focus on accounting experts. It discusses how expert witnesses are used to assist courts in resolving complex issues outside the knowledge of judges and juries. The expert's primary duty is to the court, not to the hiring party. The summary also outlines important qualities of expert testimony like being unbiased, relevant, reliable, and cost-effective. It notes that experts can face civil liability for negligence if these qualities are lacking. Finally, it provides an overview of the process for selecting and engaging expert witnesses.
Brennan, Niamh [2003] Accounting in crisis: A story of auditing, accounting, ...Prof Niamh M. Brennan
Recent accounting scandals are the product of multiple failings of auditing, accounting, corporate governance and of the market. In discussing the many factors that led to failure, this paper attempts to provide insights on regulatory inadequacies that contributed to these problems. At the centre is human failure – in particular greed and weakness. Reforms in progress are briefly examined, with the caveat that no reforms will ever fully cater for human weakness.
Brennan, Niamh [2001] Reporting Intellectual Capital in Annual Reports: Evide...Prof Niamh M. Brennan
This paper examines the extent to which a sample of 11 knowledge-based Irish listed companies is adopting methodologies for reporting of intellectual capital in their annual reports. Their market and book values were compared and a content analysis of the annual reports of the 11 listed companies was conducted. With the exception of two of the 11 listed companies, significant differences in market and book values were found suggesting that knowledge-based Irish listed companies have a substantial level of non-physical, intangible, intellectual capital assets. The level of disclosure of intellectual capital attributes by the 11 listed companies studied was low.
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The Radar reflects input from APCO’s teams located around the world. It distils a host of interconnected events and trends into insights to inform operational and strategic decisions. Issues covered in this edition include:
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Brennan, Niamh and McCafferty, Jacqueline [1997] Corporate Governance Practices in Irish Companies, IBAR – Irish Business and Administrative Research 18: 116-135.
1. Corporate governance practices in Irish companies
Niamh Brennan
University College Dublin
Jacqueline McCafferty
KPMG
(Published in IBAR – Irish Business and Administrative Research 18 (1997): 116-135)
__________________________________________________________________________________
Address for correspondence: Prof. Niamh Brennan, Quinn School of Business, University College
Dublin, Belfield, Dublin 4. Tel: +353-1-716 4704; email: Niamh.brennan@ucd.ie
2. Corporate governance practices in Irish companies
ABSTRACT
This research analyses corporate governance practices as disclosed in the annual
reports of Irish companies. In particular the paper investigates:
• Independence of boards;
• Separation of the role of chairman and chief executive;
• Presence of board sub-committees;
• Women on boards.
The study is based on a sample of 84 Irish quoted and commercial semi-state
companies. Significant improvements were found in corporate governance practices
compared with similar earlier studies. Most Irish companies comply with the Cadbury
Committee recommendations. Nonetheless there is some evidence of non-compliance.
There is evidence that women continue to be under-represented on boards of Irish
companies.
3. 1. INTRODUCTION
This paper examines a broad range of corporate governance practices in Irish public
and commercial semi-state companies based on data published in annual reports. The
purpose of the research is to evaluate the level of compliance by Irish companies with
the Cadbury code of best practice.
Corporate governance is about the way businesses are run to ensure that companies
perform in responsible and responsive ways to the interests of its stakeholders
(Clarke,1993; Pimm, 1993).
A series of international corporate failures and financial scandals in the late 1980s,
including BCCI, Polly Peck and Maxwell Communications, has heightened concerns
about the standard of financial reporting and accountability.
Cadbury code of best practice
The most influential guidance on corporate governance comes from the Cadbury
report. In May 1991 a committee on the “Financial Aspects of Corporate
Governance” (the Cadbury Committee) was set up by the Financial Reporting
Council, the London Stock Exchange and the accountancy profession, under the
chairmanship of Sir Adrian Cadbury. The overall objective of the Cadbury Committee
was to improve standards of corporate governance by setting out clearly the respective
responsibilities of directors and boards of directors to shareholders, management,
regulators, auditors, and other stakeholders.
The Cadbury report was published in 1992. The report contains a code of best practice
listing 19 recommendations. Although much of the work in developing the code of
best practice took place in the UK, it is also applicable to Irish public companies. At
the heart of the Cadbury Committee's recommendations is a voluntary code of best
practice. The code only applies to public limited companies but, as it represents best
practice, many semi-state companies have attempted to comply with the code.
1
4. Compliance by Irish public companies with these corporate governance guidelines is
central to this research. Compliance in the following areas is analysed:
• Independence of boards
♦ biographical information disclosed;
♦ number of executive versus non-executive directors;
♦ remuneration, ownership of shares and share options in the company;
• Separation of role of chairman and chief executive;
• Presence of board sub-committees such as audit, nomination and remuneration
committees and their composition;
• Women on boards.
This paper is organised as follows. Issues for research are examined in section 2. Data
and methodology are described in section 3 and section 4 presents the results. Section
5 summarises the findings and discusses possible implications of the research.
Limitations of the research and some suggestions for future research are also
considered.
2. ISSUES FOR RESEARCH
There has been extensive research internationally on many aspects of corporate
governance. Irish research, however, on corporate governance is minimal. O’Higgins
(1992) conducted 26 in-depth interviews covering selection and characteristics of non-
executive directors. MacCanna (1994) analysed inter-locking directorships on Irish
boards. O’Higgins (1992) and MacCanna (1994) also provided some data on women
on boards. The Irish Association of Investment Managers (IAIM) completed a survey
on corporate governance which was mainly concerned with compliance by Irish public
companies with IAIM’s statement of best practice on corporate governance (IAIM,
1995).
Independence of boards
Independence of boards of directors has become an area of particular interest in the
search for better corporate governance and is central to the Cadbury report. Of
particular importance, and highlighted by the Cadbury Committee, is the number and
2
5. calibre of non-executive directors whose role on board sub-committees such as audit,
remuneration and nomination committees is becoming vital.
Non-executive directors
There is anecdotal evidence of non-executive appointments made through the “old
boy” network (MacCanna, 1994). This puts a question mark over their independence.
The Cadbury report argues that an effective board of directors is an essential aspect of
corporate governance. The role and effectiveness of non-executive directors should be
strengthened by formalising their position. The Cadbury report recommends a
minimum of three non-executive directors. These non-executive directors should:
• exercise independent judgement;
• be free from other relationships interfering with the exercise of independent
judgement;
• be appointed for a specific term and reappointment should not be automatic; and
• be selected through a formal process.
Research suggests that the proportion of non-executive directors on boards of large
quoted UK companies has increased significantly over time. Conyon (1994)
completed a postal survey of 400 large UK firms in the Times 1000 companies
between 1988 and 1993. The average proportion of non-executive directors increased
from 38% in 1988 to 44% in 1993. Peel and O’Donnell (1995) examined 132 UK
listed industrial companies in 1992 and found boards comprised an average of 7.6
directors, of which 2.8 were non-executive. Only ten companies (7.6%) had no outside
directors. A majority (54%) complied with the Cadbury Committee's recommendation
that all boards should contain a minimum of three outside directors. Bostock (1995)
examined corporate governance practices in the top 100 UK companies in 1992/1993.
Average board size was between 12 and 13 directors, with an almost even divide
between executive and non-executive directors: 637 executive directors compared
with 636 non-executive directors.
Surveys by Touche Ross (1993) and Deloitte and Touche (1996) of the Financial
Times top 100 companies (carried out after the Cadbury report was published) both
3
6. found 46% of directors were non-executive. Only four companies in Touche Ross’s
(1993) survey had less than three non-executive directors.
This analysis shows that, in general, UK quoted companies comply with the Cadbury
report in terms of outside (independent) board representation. Board structures in Irish
companies are examined in this research, including average board size, together with
its composition of executive and non-executive directors.
Biographical information
The skills and experience of directors are important to the quality and performance of
company boards. The Stock Exchange (para. 12.43(i)) requires the identity of non-
executive directors to be disclosed in annual reports, together with a short
biographical note on each. This study analyses the biographical notes disclosed.
Remuneration and participation in equity and share options
Independence of non-executive directors is vital to shareholders who rely on the board
to look after their best interests. Their level of remuneration, and participation in
equity and share option schemes, could compromise this independence. The Cadbury
Committee noted that “An essential quality which non-executive directors bring to
board deliberations is that of independence of judgement”.
Fees paid to non-executive directors should be at such a level that directors do not
depend on remuneration from any one company for a sizeable proportion of their
income, which might compromise their independence (Bank of England, 1985). The
Bank of England (1985) survey of non-executive fees found a sizeable proportion
(15%) received fees in excess of £10,000.
The Cadbury Committee also stated (para 4.13) with reference to independence “... we
regard it as good practice for non-executives not to participate in share option
schemes...”. Although the Cadbury Committee did not recommend that outside
directors should not purchase shares in the companies employing them, Peel and
O’Donnell (1995) argue that the same rationale as applies to share options also
pertains to shares.
4
7. Peel and O’Donnell (1995) examined ownership of equity and participation in share
option schemes of non-executive directors. Of 115 companies operating a share option
scheme, 22 (19%) disclosed that at least one outside director was a member of the
scheme. Thus, most companies in the sample were applying the Cadbury Committee's
preference that outside directors do not hold share options. In contrast, Peel and
O’Donnell (1995) found that most companies (95%) with outside directors disclosed
that one or more non-executive directors beneficially held ordinary shares in the
company.
Independence of non-executive directors is vital to the confidence of shareholders
who rely on the board to look after their best interests. Fees paid to Irish non-
executive directors are analysed in this research. Ownership by non-executive
directors of equity and rights to share options which could compromise their
independence are also examined.
Separation of role of chairman and chief executive
The role of chairman and chief executive can be separate or combined. Separation of
the role of chairman and chief executive is important in avoiding concentrating too
much power in the hands of one individual. The Cadbury Committee, along with
many other authorities, recommended that these two posts be separated.
Where the chief executive officer is chairman of the board of directors, the
impartiality of the board is compromised (Donaldson and Davies, 1991). Rechner and
Dalton (1991) found that firms with independent governance (separate chairmen and
chief executive officers) consistently outperformed ‘CEO duality’ firms.
Bostock (1995) found 71% of the top 100 UK companies split the role of chairman
and chief executive, leaving only 29% combining these roles. Of these 29 companies
only two lacked a strong and independent element on the board.
Peel and O’Donnell (1995) found that 95 companies (72%) had an executive
chairman, whereas only 19 (14%) had a joint chairman/chief executive.
5
8. In Conyon’s (1994) postal survey of 400 firms in the Times 1000 companies, 77% of
the sample separated the role of chief executive officer and chairman in 1993
compared with 57% in 1988.
The position of chairman and chief executive in Irish public and commercial semi-
state companies is examined. Of particular interest are companies that combine these
two roles.
Board sub-committees
The Cadbury Committee recommends that board sub-committees such as audit
committees, nomination committees and remuneration committees be established.
Audit committees
One of the most important recommendations of the Cadbury report is the
establishment of audit committees to be used as a link between companies and their
external auditors. Audit committees have a critical role to play in ensuring the
integrity of company financial reports and in raising corporate governance standards.
Bostock (1995) found that 94% of companies reported (in their annual reports) having
audit committees. This contrasts with earlier surveys showing fewer companies with
audit committees. The Bank of England (1988) surveyed the top 250 of the Times l000
companies and found 56% had audit committees, although only 12% declared the
existence of such a committee in their annual reports.
Bostock (1995) found the composition of audit committees to be as recommended by
the Cadbury report (minimum of three non-executive directors). A total of 361 non-
executive and 11 executive directors were on 88 audit committees - an average of four
non-executive members per audit committee.
Formation of an audit committee is a key recommendation of the Cadbury report. This
research investigates compliance with this recommendation, the composition of audit
6
9. committees and, of particular importance, the number of non-executive directors
thereon.
Nomination committees
Establishment of nomination committees is not a recommendation of the Cadbury
report. However, the presence of such a committee helps to bring a more objective
approach to selection of executive and non-executive board members (Bostock, 1995).
This can be seen as strengthening independence of the board and restricting the
freedom of chief executives to choose board members.
Bostock (1995) found 21% of companies surveyed reported the existence of a separate
nomination committee, with no reference to such a committee in 53% of cases. This
compares with a recent study by Main (1994) who interviewed top executives of 24
large British companies. He found that only six (25%) out of 24 companies had a
nomination committee through which non-executives are selected.
The structure of these nomination committees should be such that they contain a
majority of non-executive directors. Bostock (1995) found, of the 21 nomination
committees, only 18 gave their composition. These 18 committees were made up of
68 non-executive directors and 22 executives directors. Interestingly, of the 22
executives, 14 were executive chairmen, while five were chief executives, showing
that executive chairmen and chief executives still have a big say in appointments to
boards.
The existence and composition of nomination committees in Irish companies is
examined in this research.
Remuneration committees
Establishment of remuneration committees is required by the Cadbury code of best
practice for all companies listed on the Irish Stock Exchange, with effect for financial
years ending on or after 31 December 1995. The Cadbury code of best practice states
“executive directors’ pay should be subject to the recommendations of a remuneration
7
10. committee made up wholly or mainly of non-executive directors”. Members of
remuneration committees should be listed in annual reports.
In January 1995 the Confederation of British Industry appointed a committee under
Sir Richard Greenbury to identify good practice and prepare a code for determining
directors’ remuneration. The Greenbury report was published in July 1995. Much of
the Greenbury code of best practice has since been incorporated into the Stock
Exchange listing rules. Compliance with Greenbury recommendations on directors’
remuneration is not examined in this paper as these were only applicable for
accounting periods beginning on or after 31 December 1995 and had been
implemented by only two or three listed companies at the time of this research.
Bostock (1995) found 95% of companies surveyed had remuneration committees.
These findings are similar to Conyon (1994) who found 94% of quoted companies
operated a remuneration committee in 1993. In a much earlier study, Main and
Johnson (1993) found, for a sample of 220 quoted companies in 1989/90, that only
31% of firms operated remuneration committees.
Bostock (1995) found only 46 executives, compared with 418 non-executive directors,
sat on 93 remuneration committees - an average of 4.5 non-executives per
remuneration committee. This is somewhat higher than Conyon (1994) who found an
average of three non-executive directors on remuneration committees. This variation
could be due either to the variation in methodology used or sample taken. However,
both studies show a large and increasingly independent presence on remuneration
committees. Bostock (1995) found 28 (29%) remuneration committees had the
company chairman as a member.
The presence of remuneration committees, their composition between executive and
non-executive members and their independence, including whether the chairman of
the board is a member of this committee, is examined in this study.
8
11. Women on boards
O’Higgins (1992) suggests two advantages of having women on boards:
• Women are not part of the ‘old boy’ network which allows them to be more
independent;
• Women may have a better understanding of consumers, recognition of the needs of
customers and of opportunities for companies in meeting those needs.
In a survey of 72 Irish companies in 1992, O‘Higgins (1992) found only 10 (2%) out
of 482 directors were women. Out of 1,751 directors of the top 249 financial and non-
financial companies in Ireland in 1993, MacCanna (1994) found only 86 (4.29%) were
women.
These results are similar to other surveys completed in the UK. The Ashridge
Management Research Group (Holton, 1995) examined appointment of women to
boards of the Times 1000 top 200 companies. Findings revealed that 49 (25%)
companies had women at board level. The Group found that, though more women
than before were reaching top levels of major UK companies, they comprised a
disappointingly small proportion of the total population of directors. Only 4% of the
estimated total number of directorships were held by women. An important difference
was found between executive and non-executive women directors. Women are far less
likely to be executive directors in these companies than are their male counterparts.
Women represent less than 1% of executive directors. This research indicates that
whether it is the number of appointments or the type of directorship held, few women
make it to the boards of UK listed companies.
The Ashridge Group survey (Holton, 1995) also found women were under represented
on board sub-committees. Only about half of the women non-executive directors were
members of either audit or remuneration committees. The exclusion of women from
the boardroom and associated committees raises many fundamental questions.
Conyon and Mallin (1996) completed a similar study using data from the top 350 UK
companies. Only 73 (21%) had at least one woman on the main board. Most of these
were non-executive rather than executive directors. Indeed, the ratio of companies
9
12. with at least one woman executive director to companies with at least one woman
non-executive director is about 19%.
Previous research in Ireland and the UK presents evidence of serious under
representation of women in boardroom positions (O’Higgins, 1992; MacCanna, 1994;
Holton, 1995; Conyon and Mallin, 1996). This research will examine participation of
women on boards to evaluate whether companies in Ireland have responded to public
pressure for greater participation by women at board level.
3. RESEARCH METHODOLOGY
Population and sample
The population consists of all public limited companies listed on the Irish Stock
Exchange. The Irish stock market annual 1995 (O’Neill, 1995) lists 89 public limited
companies quoted on the Irish Stock Exchange. In addition, 16 commercial semi-state
companies are included in the survey.
Data on corporate governance practices were obtained from annual reports published
in 1995/96. All companies were send a written request for their annual report, with
one follow up reminder. Twenty one cases (Appendix 2) had to be excluded as their
annual report could not be obtained. Population and sample details are summarised in
table 1. The sample consists of 84 listed and semi-state companies (Appendix 1).
Table 1: Population and sample
Semi-state
Listed companies Total
Population 89* 16 105
Annual reports not available (Appendix 2) (21) 0 (21)
Sample (Appendix 1) 68 16 84
* Source: Irish Stock Market Annual 1995 (O’Neill, 1995)
Extraction of data on corporate governance practices
Annual reports were examined for the following;
• Number of directors on boards
10
13. • Number of non-executive and executive directors
• Board sub-committees
• Participation of non-executive directors in equity and in share option schemes
• Women on boards
4. RESULTS
Independence of boards
Table 2 shows that 832 directors were members of 84 company boards, of which 479
(46%) were non-executive directors. Six companies (7%) failed to distinguish
between executive and non-executive directors. The average Irish company board
comprised 9.9 directors, of which 5.7 were non-executive directors. Non-executive
directors comprised 57% of total directors. Semi-state company boards are larger and
contain a greater proportion of non-executive directors than quoted companies. This
analysis shows that, in general, Irish companies were complying with the spirit of the
Cadbury report in terms of outside board representation.
Table 2: Number of directors on boards
Number of directors Average/board
Listed Semi-state Total Listed Semi-state Total
Non-executive directors 371 ( 56%) 108 ( 64%) 479 ( 57%) 5.5 6.8 5.7
Executive directors 277 ( 42%) 30 ( 18%) 307 ( 37%) 4.1 1.9 3.7
No distinction made 16 ( 2%) 30 ( 18%) 46 ( 6%) 0.2 1.9 0.5
664 (100%) 168 (100%) 832 (100%) 9.8 10.6 9.9
The Cadbury report recommended that companies should have a minimum of three
non-executive directors. Table 3 shows that 70 (83%) companies complied with this
recommendation. There were seven companies with more than ten non-executive
directors. Three of these companies were formerly co-operatives and two are semi-
state companies which probably accounts for the large number of non-executive
directors on their boards.
11
14. Table 3: Number of non-executive directors per board
Companies with Listed Semi-state Total
One non-executive director 4 - 4
Two non-executive directors 4 - 4
Three non-executive directors 13 1 14
Four non-executive directors 8 1 9
Between five and ten non-executive directors 31 9 40
More than ten non-executive directors 5 2 7
Not disclosed 3 3 6
68 16 84
The Stock Exchange requires disclosure of a short biographical note on non-executive
directors. Table 4 shows that most companies (71%) disclose some biographical
information about all directors or non-executive directors. However, a substantial
minority (31%) disclose no biographical information, of which 13 are listed
companies. No biographical information was disclosed about directors by 11 (69%)
semi-state companies - presumably because the Stock Exchange regulation to disclose
such information does not apply to them.
Table 4: Biographical information about directors
Biographical information Listed Semi-state Total %
None 13 11 24 29%
For non-executive directors only 9 - 9 10%
For all directors 46 5 51 61%
68 16 84 100%
Table 5 analyses the type of biological information disclosed. The majority of
companies disclose some information about other directorships or business
experience, and less frequently about the age and qualifications of directors. The
Electricity Supply Board is unique in Ireland in disclosing attendance by directors at
board meetings.
12
15. Table 5: Nature of biographical information
Biographical information disclosed Listed Semi-state Total %
Age 31 0 31 37%
Qualifications 26 0 26 31%
Other directorships/business experience 54 5 59 70%
Date of appointment 44 3 47 56%
Attendance at board meetings 1 0 1 1%
It is important for independence that non-executive directors should not be dependent
on their non-executive remuneration for a sizeable part of their income. In this
context, non-executive directors’ fees were analysed in table 6. This analysis was not
possible in the case of 22 (26%) companies which did not distinguish adequately
between executive and non-executive remuneration.
Fees to non-executive directors can include fees for attendance at board meetings, fees
for attending sub-committee meetings, benefits and pension contributions. In 9 (11%)
cases, average remuneration per non-executive director exceeded £20,000.
Table 6: Fees paid to non-executive directors
Average fee/non-executive director Listed Semi-state Total %
No distinction between
- executive and non-executive directors 3 3 6 7%
- executive and non-executive remuneration 11 5 16 19%
14 8 22 26%
Up to £5,000 11 6 17 20%
IR£5,001-10,000 11 2 11 13%
IR£10,001-15,000 14 - 14 16%
IR£15,001-20,000 9 - 9 10%
IR£20,001-25,000 2 - 4 5%
IR£25,001-30,000 3 - 2 2%
IR£30,001-35,000 1 - 3 4%
More than IR£35,001 3 - 3 4%
68 16 84 100%
Table 7 analyses outside directors' share option interests. Of the companies surveyed
52 (62%) operated a share option scheme. Of these, 29 (55%) disclosed that at least
one non-executive director was a member of the company's share option scheme.
13
16. In contrast, however, table 7 shows that in 72% of companies at least one non-
executive director beneficially held ordinary shares. Peel and O’Donnell (1995) argue
that this could compromise their independent judgement.
Table 7: Ownership of equity and share options by non-executive directors
Listed Semi-state Total %
No share option scheme 16 16 32 38%
Share option scheme 52 0 52 62%
68 16 84 100%
Non-executive directors with share options 29 - 29 55%
Non-executive directors with beneficial
interests in equity shares 61 0 61 73%
Separation of role of chairman and chief executive
Table 8 shows that 73 (87%) companies had a separate chairman and chief executive
in compliance with the Cadbury Committee's recommendation. Nine companies had
dual chairman/chief executives - Arcon International Resources, Bula Resources,
Glencar Exploration, Impshire Thoroughbreds, Smurfits, Kingspan, Lyons Irish
Holdings, New Ireland and Woodchester.
Table 8: Separation of role of chairman and chief executive
Listed Semi-state Total %
Separate chairman and chief executive 58 15 73 87%
Dual role chairman and chief executive 9 - 9 11%
No details available 1 1 2 2%
68 16 84 100%
Board sub-committees
Many Irish listed companies have separate board sub-committees. The structure and
composition of these committees are summarised in tables 9 to 11.
Audit committees
Table 9 shows that 65 (77%) companies reported having an audit committee. These
audit committees included executive and non-executive directors, together with other
14
17. professional individuals from within the company. There was an average of 3.2
members per audit committee. There were 148 (72%) non-executive members on 65
audit committees (which gave their membership) - an average of 2.3 non-executive
members per audit committee. These committees are almost exclusively non-
executive, with only 20 (10%) executive directors in total.
Table 9: Audit committees
Listed Semi-state Total %
Audit committee 55 10 65 77%
No audit committee reported 13 6 19 23%
68 16 84 100%
Mean number on audit committee 3.3 3.3 3.2
Composition of audit committee
Executive directors 20 - 20 10%
Non-executive directors 148 - 148 72%
Other professional members 30 - 30 15%
No distinction made between executive
and non-executive directors - 7* 7 3%
198 7 205 100%
Women directors on audit committee
At least one women director 9 1 10 15%
No women directors 46 9 55 85%
55 10 65 100%
* Only 2 of the ten semi-state companies with audit committees disclosed the
membership of the committee
Nomination committees
Table 10 shows that 15 (18%) companies reported having nomination committees. Of
these, four did not indicate whether committee members were executive or non-
executive directors. The remaining 11 committees comprised eight (15%) executive
directors and 36 (68%) non-executive directors.
15
18. Table 10: Nomination committees
Listed Semi-state Total %
Nomination committee 14 1 15 18%
No nomination committee 54 15 69 82%
68 16 84 100%
Mean number on nomination committee 4.3 6 4.4
Composition of nomination committee
Executive directors 8 * 8 15%
Non-executive directors 36 36 68%
Other professional members 9 9 17%
53 53 100%
Women directors on nomination committees
At least one woman director 2 * 2 14%
No women directors 12 12 86%
14 14 100%
* The one semi-state company with a nomination committee did not disclose its
membership
Table 11: Remuneration committees
Remuneration committee Listed Semi-state Total %
Company with remuneration committee 52 6 58 69%
Company with no remuneration committee 16 10 26 31%
68 16 84 100%
Mean number on remuneration committee 3.5 3.6 3.5
Composition of remuneration committee
Executive directors 25 3 28 17%
Non-executive directors 104 15 119 71%
Other professional members 20 - 20 12%
149 18 167 100%
Chairman on remuneration committee
Chairman on remuneration committee 33 4 37 64%
No chairman on remuneration committee 9 12 21 36%
42 16 58 100%
Women directors on remuneration committee
At least one woman director 5 1 6 10%
No woman directors 37 15 52 90%
42 16 58 100%
Remuneration committees
Table 11 shows that 58 (69%) companies had remuneration committees comprising
119 (71%) non-executives and only 28 (17%) executives - an average of 2 non-
16
19. executives per remuneration committee. The survey also found that 37 (64%)
remuneration committees included the company chairman as a member.
Women on boards
Table 12 shows that 25 companies (30%) have women on their boards. There were 36
women directors (4.3% of all directors) - eight (22%) executive and 14 (39%) non-
executive directors (seven companies did not distinguish between executive and non-
executive directors). Of the 25 companies with women directors, 16 had one, eight
had two and one, Aer Lingus, had four women directors in the twenty one month
reporting period.
This survey also analysed appointment of women directors to board sub-committees.
Tables 9, 10 and 11 show that 10 (15%) companies with audit committees had at least
one women director on the committee; two (24%) companies had women directors on
the nomination committee; and six (10%) companies had female directors on
remuneration committees.
Table 12: Women on boards
Companies with women directors on boards Listed Semi-state Total %
Women directors 16 9 25 30%
No women directors 52 7 59 70%
68 16 84 100%
Companies with
One woman director 12 4 16 64%
Two women directors 4 4 8 32%
Four women directors - 1 1 0%
16 9 25 100%
Number of women directors
Non-executive 13 13 26 72%
Executive 7 - 7 19%
No distinction made 0 3 3 9%
20 16 36 100%
Percentage of total
Women directors/total directors 3% 9.5% 4.3%
Women non-executive directors/total non-
executive directors 3% 3.7% 3.6%
Women executive directors/total executive
directors 2.5% 3.3% 2.4%
17
20. 5. SUMMARY AND CONCLUSIONS
The purpose of this research has been to provide some new evidence on corporate
governance practices in Irish public companies and semi-state companies. This
research has attempted to evaluate the level of compliance by Irish public companies
and semi-state companies with the Cadbury code of best practice using data in annual
reports. Thus the information available is limited to that published by companies in
their annual reports.
Independence of boards
The survey of board membership of 84 Irish public and semi-state companies revealed
average board membership of 9.9 directors. Boards in the UK are considerably larger.
Bostock (1995) and Conyon (1994) found average board sizes of between 12 and 13
members. Peel and O’Donnell (1995), surveying a different sample (industrial
companies), found that the average board comprised 7.6 directors.
Nearly all (83%) of Irish companies complied with the Cadbury Committee's
recommendation that all boards contain a minimum of three outside directors. It
should be noted that six companies (7%) did not distinguish between executive and
non-executive directors in their annual reports. In this survey the average number of
non-executive directors was 5.7 compared with 2.8 in Peel and O’Donnell (1995).
A substantial proportion of companies (29%) do not provide any biographical
information about directors. The Cadbury code recommends that boards should
include high calibre directors but if no biographical information is provided it is
difficult for shareholders to judge the calibre of directors.
The analysis of fees paid to non-executive directors shows that amounts involved are
generally modest. However, nine (11%) companies paid more than £20,000 on
average to their non-executive directors.
Of the companies operating a share option scheme, 29 (55%) companies disclosed that
at least one non-executive director was a member of the company's share option
18
21. scheme. This compares unfavourably with Peel and O‘Donnell (1995) who found that
of 115 companies who operated a share option scheme, 22 (19%) disclosed that at
least one outside director was a member of the company's share option scheme.
The Cadbury Committee does not prohibit outside directors from purchasing shares in
the companies employing them. This survey shows that most (72%) companies
disclosed that at least one non-executive director beneficially held ordinary shares in
the company. Similarly, Peel and O’Donnell (1995) found that most (95%) companies
had at least one outside director holding ordinary shares in the company.
Separation of role of chairman and chief executive
Of the companies surveyed 73 (87%) had a separate chairman and chief executive in
compliance with the Cadbury Committee's recommendation, while only nine (11%)
companies combined these roles. This compares with Peel and O’Donnell’s (1995)
findings of 95 companies (72%) with executive chairmen and only 19 (14%) with
joint chairman/chief executive. Bostock (1995) similarly found 71% split the role of
chairman and chief executive and only 29% combining the role of chairman and chief
executive. Thus Irish companies compare well with their UK counterparts in
separating the roles of chairman and chief executive.
Board sub-committees
Only 77% of Irish public and semi-state companies reported having an audit
committee compared with 94% in Bostock’s (1995) survey. In total there were 148
(72%) non-executive members on 65 audit committees (which gave their
membership) - an average of 2.2 non-executive members per audit committee.
Only 18% of companies report the presence of a nomination committee. This
compares with Bostock (1995) who found that 21% of companies surveyed had
nomination committees. The 15 (18%) nomination committees were made up of 7
(19%) executive and 20 (55%) non-executive directors.
This research shows that 58 (69%) companies had a remuneration committee.
Remuneration committees are more common in the UK. In Bostock’s (1995) study
19
22. 95% had a remuneration committee. There were 28 (17%) executive directors
compared with 116 (70%) non-executives directors on these committees. In Bostock
(1995) there were 418 non-executives on 92 remuneration committees.
Women on boards
This research shows that 25 companies (30%) have women on their boards. Women
comprised x% of all directors, compared with less than 5% in boardroom positions for
the leading United Kingdom companies (Holton, 1995). There were more women
non-executive directors - 15 (16%) non-executive and 8 (8%) executive directors.
In summary, this research shows a significant improvement by Irish companies in
corporate governance practices following publication of the Cadbury report. Most
companies make reference to the Cadbury report and comply in some form with the
'code of best practice'.
In conclusion, this research would tend to indicate that the 84 companies surveyed are
a long way down the road to implementing better corporate governance practices, as
recommended by the Cadbury report.
20
23. REFERENCES
Bank of England, 1988 ‘The Composition of Company Boards’, Bank of England
Quarterly Bulletin, May, pp. 242-245.
Bostock, R., 1995 ‘Company Responses to Cadbury’, Journal of Corporate
Governance, Vol. 3 (April), pp. 72-76.
Cadbury, Sir. A., 1992 Committee on the Financial Aspects of Corporate Governance,
UK: Gee Publishing.
Clarke, T., 1993 ‘Corporate Governance after Cadbury’, Journal of Corporate
Governance, Vol. 3 (October), pp. 28-32.
Conyon, M., 1994 ‘Corporate Governance Changes in UK Companies between 1988
and 1993’, Corporate Governance: An International Review, Vol. 2 (April), pp. 87-
99.
Conyon, M. and Mallin, C., 1996 Women in the Boardroom; Evidence from large UK
Companies. Working paper, University of Warwick, UK.
Deloitte and Touche, 1996 Corporate Governance Disclosure, London: Deloitte and
Touche.
Donaldson, L. and Davies, J. H., 1991 ‘Stewardship Theory or Agency Theory: CEO
Governance and Shareholder Returns’, Australian Journal of Management, Vol. 16,
No.1, pp.49-63.
Holton, V., 1995 ‘Corporate Report Surveying the Situation for Women Directors in
the UK’, Journal of Corporate Governance, Vol. 3 (April), pp. 102-107.
Irish Association of Investment Managers, 1995 Survey on Corporate Governance of
Irish Quoted Companies, Dublin: Irish Association of Investment Managers.
21
24. MacCanna, L., 1994 Networks of Corporate Power, MBA thesis, University College
Dublin.
Main, B. and Johnston, J., 1993 ‘Remuneration Committees and Corporate
Governance’, Accounting and Business Research, Vol. 23, No. 91A, pp. 351-362.
O’Neill, J. D., 1995 The Irish stock market annual, Dublin: Private Research Limited.
O’Higgins, E., 1992 Non-Executive Directors in the Irish Boardroom; Selection and
Characteristics, Dublin: Network.
Peel, M. J. and O’Donnell, E., 1995 ‘Board Structure, Corporate Performance and
Auditor Independence’, Journal of Corporate Governance, Vol. 3 (October), pp. 207-
215.
Pimm, D. A., 1993 ‘Corporate Governance Disclosures’, in Tonkin, D. J. and Skerratt,
L. C. L. (Eds.), Financial Reporting 1992-93, London: Institute of Chartered
Accountants in England and Wales.
Rechner, P. L. and Dalton, D. R., 1991 ‘CEO Duality and Organizational
Performance: A Longitudinal Analysis’, Strategic Management Journal, Vol. 12, No.
2, pp. 155-160.
Touche Ross, 1993 Corporate Governance Disclosure, London: Touche Ross.
22
25. Appendix 1: Companies surveyed
1. Abbey plc 44. James Crean plc
2. Adare Printing Group plc 45. Jefferson Smurfit Group plc
3. AGF-Irish Life Holdings p.l.c. 46. Jones Group plc
4. Allied Irish Bank Group 47. Jurys Hotel Group plc
5. Aminex plc 48. Kenmare Resources plc
6. Anglo Irish Bank Corporation plc 49. Kerry Group plc
7. Aran Energy plc 50. Kingspan Group plc
8. Arcon International Resources plc 51. Lyons Irish Holdings plc
9. Ardagh plc 52. McInerney Properties plc
10. Arnotts plc 53. Navan Resources plc
11. Avonmore Foods plc 54. New Ireland Holdings plc
12. Bank of Ireland Group 55. Norish plc
13. Barlo Group plc 56. Oglesby & Butler Group plc
14. Boxmore International plc 57. Readymix plc
15. Bula Resources plc 58. Robert J. Goff & Co. plc
16. Clondalkin Group plc 59. Ryan Hotels plc
17. CRH plc 60. Seafield plc
18. Dunloe House Group plc 61. Silvermines Group plc
19. Elan plc 62. Tribune Newspapers plc
20. Ennex International plc 63. Tullow Oil plc
21. European Leisure plc 64. Unidare plc
22. FBD Holdings plc 65. United Drug plc
23. Fishers International plc 66. Waterford Foods plc
24. Fitzwilton plc 67. Waterford Wedgwood plc
25. Flogas plc 68. Woodchester Investments plc
26. Fyffes plc
27. Glencar Explorations plc Semi-state companies
28. Golden Vale plc 1. ACC Bank plc
29. Grafton Group plc 2. Aer Lingus plc
30. Green Property plc 3. Aer Rianta cpt
31. Greencore plc 4. An Bord Bainne (Irish Dairy Board)
32. Gypsum Industries plc 5. An Post
33. Heiton Holdings plc 6. An Post National Lottery Company
34. Hibernian Group plc 7. Bord Gáis Éireann
35. IAWS Group plc 8. Coillte Teo
36. IFG Group plc 9. Electricity Supply Board
37. Impshire Thoroughbreds plc 10. Irish National Petroleum Corporation
38. Independent Newspapers plc 11. ICC Bank plc
39. Irish Continental Group plc 12. Nitrigen Eireann Teo
40. Irish Life plc 13. Shannon Free Airport Dev't Co. Ltd
41. Irish Permanent plc 14. Telecom Eireann
42. Ivernia West plc 15. TSB Bank
43. IWP International plc 16. Voluntary Health Insurance Board
23
26. Appendix 2: Companies not included in this research
Company Comment on exclusion from research
1. Andaman Resources plc Northern Irish company
2. Dakota Group plc Management buyout - no longer quoted
3. DCC plc
4. Dana Exploration plc
5. Dragon Oil plc
6. Ewart plc Northern Irish company
7. Gaelic Resources plc
8. Inish Tech plc
9. Irish Press plc Company no longer trading
10. Kish Resources plc
11. Mackie plc Northern Irish company
12. Minmet plc
13. Northern Ireland Electricity plc Northern Irish company
14. Ovoca Gold Exploration plc
15. Petroceltic plc
16. Power plc Company in financial difficulties
17. Powerscreen plc Northern Irish company
18. Reflex Group plc
19. Tuskar Resources plc
20. UTV plc Northern Irish company
21. World Fluids plc
24