Thesis (MBA)--Stellenbosch University, 2004. / ENGLISH ABSTRACT: The main problem area this dissertation studied is whether there the appointment of independent directors to the board, is firstly an adequate way to ensure good corporate governance, and secondly, if it is not the case, what must companies do to amend the situation. As result of various factors, amongst them the spectacular corporate failures worldwide that demonstrated the flaws in the shareholder democratic model, shareholder activism and global competitiveness corporate governance has taken centre stage. Pivotal to good corporate governance is the board of the company, as postulated not only by the majority of corporate governance models, but also by all the corporate governance codes. Furthermore, the perception of shareholders that independent directors are the most effective way to ensure that shareholder interests are protected has also been entrenched in the directives of corporate governance codes, with the inclusion of the South African King Code. As a result of the foregoing the role of independent directors has come under the spotlight, especially their failure to act in some of the instances of governance abuse by management. In this regard strong responses and possible prosecution has now alerted non-executive directors to the fact that there is no difference in liability between them and the executive brothers. Non-executive directors or independent directors have primarily two functions, they must monitor the performance of management and provide strategic input. As a result of the aforesaid corporate collapses non-executive directors are of the opinion that their monitoring role is being emphasis at the cost of their strategic role, which might be to the detriment of the company. Independent directors as the solution to all governance problems are however not flawless. Independence interpreted restricts access to possible suitable candidates. Furthermore, ineffective selection processes curtail the optimal functioning of boards, manipulation of information by management, lack of director training, and the increasing cost attendant to ensure adequate independent representation on the board. There are also "soft issues" that are even mere pervasive and destructive, the boardroom atmosphere that precludes open and honest discussion, the powerful chief executive and the failure of some directors to distinguish between managing and directing. In view of the problems highlighted above, this study project proposes that there has, firstly been an over-emphasis of the role that the independent director can play in ensuring good corporate governance at the cost of other measures that can be implemented. A more optimal situation can be created through a combination of a strong independent presence coupled with ongoing training and evaluation of boards and directors. There are two prerequisites for such training and evaluation to be successful. Firstly, the process must be actively driven by the chairman of the board and, secondly, directors must be made aware of the fact that shareholders have become more demanding and critical of their performance. Unless they are perceived to add value to the company they may find that they are without a job. In today's demanding environment companies and boards that do not actively encourage a learning culture will not survive. / AFRIKAANSE OPSOMMING: Die kern-probleemgebied wat in die verhandeling bestudeer is is tweeledig, eerstens, of die aanstelling van onafhanklike direkteure op die direksie voldoende is om goeie korporatiewe bestuur te verseker, en tweedens, indien dit nie die geval is nie, wat maatskappye te doen staan om die situasie reg te stel. As gevolg van verskeie faklore, onder andere die skouspelagtige korporatiewe mislukkings wereldwyd, wat die gebreke in die aandeelhouer demokratiese model aan die kaak gestel het, aandeelhouer aktivisme en globale mededinging, het korporatiewe bestuur 'n sentrale rol aangeneem. Die kern tot goeie korporatiewe bestuur is die direksie van die maatskappy, soos daargestel deur beide die meerderheid van koperatiewe bestuursmodelle en al die kodes ten opsigte van korporatiewe bestuur. Voorts, word die aanname van aandeelhouers dat onafhanklike direkteure die mees doeltreffendste wyse is om hulle belange te beskerm, verder ingeburger in die voorskrifte van korporatiewe bestuurskodes, wat die Suid-Afrikaanse King Kode 2 insluit. As gevolg van voormelde het die rol van onafhanklike direkteure in die spervuur beland, veral as gevolg van hulle versuim om op te tree in sommige gevalle van korporatiewe vergrepe deur die bestuur van die maatskappy. In die verband, het die sterk reaksie en die sprake van vervolging, 'n waarskuwing aan nie-uitvoerende direkteure gerig dat hulle net so aanspreeklik gehou kan word as hulle uitvoerende broers. Nie-uitvoerende direkteure or onafhanklike direkteure het primer twee funksies, hulle moet die prestasie van die bestuur monitor and hulle moet strategiese insette lewer. As gevolg van gesegde korporatiewe mislukkings is nie-uitvoerende direkteure nou van mening dat hulle moniteringsrol beklemtoon word ten koste van hulle strategiese rol, wat tot die nadeel van die maatskappy mag strek. Onafhanklike direkteure as die oplossing tot alle bestuursprobleme is egter nie volmaak nie. 'n Streng interpretasie van onafhanklikheid beperk die keuse van moontlike geskikte kandidate. Voorts word die optimale funktionering van direksies ingeperk deur ondoeltreffende keuringsprosesse, die manipulering van inligting deur die bestuur, gebrek aan direkteursopleiding and die stygende koste verbonde aan 'n voldoende onafhanklike teenwoordigheid op die direksie. Daar is ook "sagte" aspekte wat selfs meer vernietigend inwerk, naamlik die atmosfeer wat heers in die direksiesaal, die magtige hoof uitvoerende direkteur en die gebrek aan insig by direkteure rakende die verskil tussen die pligte van 'n direkteur en 'n bestuurder. Gegewe die voorafgaande probleme, is die verhandeling van mening dat die rol wat die onafhanklike direkteur kan speel om goeie korporatiewe bestuur te verseker oorbeklemtoon word. Hierdie klem is ten koste van ander maatreels, wat ingestel kan word. 'n Meer optimale klimaat kan geskep word deur 'n kombinasie van 'n sterk onafhanklike teenwoordigheid op die direksie, gekoppel aan deurlopende opleiding en evaluering van direksies en direkteure. Ten einde te verseker dat sodanige opleiding en evaluasie suksesvol is, is daar twee voorvereistes. Eerstens, moet die proses aktief deur die voorsitter bestuur word, en tweedens, moet 'n bewustheid by direkteure gekweek word aangaande die verwagtinge van aandeelhouers, wat meer veeleisend en krities staan teenoor hulle prestasie. Tensy hulle geag word waarde toe te voeg, mag direkteure hulle sonder 'n werk bevind. In vandag se veeleisende omgewing kan maatskappye en direksies, wat nie 'n leerkultuur aanmoedig nie, nie verwag om te oorleef nie.

Study project (MBA)--University of Stellenbosch, 2003. / ENGLISH ABSTRACT: This study examines the role of the board of directors of private and public companies. The focus is on "directing" (and not managing) - in view of the policy and strategic dimensions of boardroom activities. The second step focuses on the sustainability issue - the what and why of this important core governance value. A modem board is responsible for business strategy development and ensuring that a strategic planning process is in place, is used, and produces sound choices. The board must monitor the implementation of current strategic initiatives to assess whether they are on schedule, on budget, and producing effective results. Second King Report on Corporate Governance for South Africa (King II) has lately amended these responsibilities to include recommendations on minimum practices that should be adopted by corporations in relation to their corporate governance practices, as well as sustainability management and reporting. King II follows the worldwide trend of "triple-bottom-line", whose approach is recognising that the company has to consider stakeholders when formulating strategies. As part of building a case for the consideration of sustainability, cost savings could be the primary motivator (if nothing else) for making a business case for sustainable development. Businesses can reduce costs by making environmental improvements that deliver an immediate impact on the financial bottom line. They can also reduce financial, reputation and political risks by engaging with stakeholders. Understanding the concerns and interests of employees, customers, Non-governmental organisations (NGO's), politicians and business partners helps a company to manage environmental and social expectations better, resulting in reduced risk of civil action or brand assassination, improved access to capital and insurance, cost savings and reduced vulnerability to regulatory changes. Another view is that of avoiding a strategic disadvantage, where if firms do not respond to environmental opportunities, and their competitors do, they risk placing themselves at a competitive disadvantage. Governance, simply defined, is "the process of decision-making and the process by which decisions are implemented. If governance is about transparency and looking after shareholder value, and sustainability is about ensuring long-term success, then sustainability is the core part of governance. Managing this equilibrium is an integral aspect of good governance and a major challenge for any board. It will be achieved only where there is active engagement with all stakeholders and where proper attention is paid to health, safety and environmental issues - board of directors is accountable for addressing these challenges. The board should also ensure that its sustainability responsibilities are properly delegated and that strategies and policies are implemented through the effective use of a board representative for sustainability, a dedicated board committee for sustainability, and senior management. The consideration of sustainability issues by directors can reveal new opportunities for the company. Ignoring these opportunities could weaken its competitive position. In addition, if sustain ability issues are not considered, both the company and its directors may be held liable for failing to act with due diligence. The board must be aware of the corporation's liabilities caused by its sustainability obligations over the life cycle of its activities, products and services, and the necessary financial provision for such liabilities must be made and communicated to stakeholders. Directors must be aware of the sustainability threats, and take steps to safeguard the organisation - it is a matter of risk management. It is also a matter of investment, not cost. Like any investment, companies must find the resources and assess the paybacks. But there are many cases where the paybacks have been swift and substantial, and it has been shown that addressing these issues is more likely to help companies identify cost reductions than add to their costs. A number of leading South African companies, for example Anglo American, BlIP Billiton, Eskom, Sasol, and South African Breweries - have begun to drive the sustainability agenda within the local business community. Two case studies (Sasol and Nestle) of companies that are making sustainable development a core part of their governance role are presented. Recommendations naturally do not guarantee safety against failure, but a board can begin with changes that, taken together, will provide a better early-warning system against failure: 1. Reengineer the board. 2. Monitoring and evaluation by the board. 3. Introduce a Sustainability Board Committee This work has illustrated that by having appropriate standards of governance the long-term performance is raised and total shareholder return is enhanced. / AFRIKAANSE OPSOMMING: Hierdie studie ondersoek die rol van die direksie van publieke en private maatskappye. Dit fokus op die "leiding" (en nie die bestuur) - in die lig van die beleid en strategie aspekte van die raadsaal aktiviteite. Die tweede deel fokus op die volhoubaarheid kwessie - die wat en waarom van hierdie belangrike bestuurswaarde. 'n Moderne direksie is verantwoordelik vir die ontwikkeling van die besigheidstrategie en die versekering dat 'n strategiese beplanningsproses in plek is, funksioneer en lei tot die regte besluite. Die direksie moet die implementering van die strategie monitor om te verseker dat die resultate beriek word, op skedule is en binne die begroting is. Die tweede King-verslag oor korporatiewe beheer in Suid-Afrika (King II) het die verantwoordelikhede verander deur aanbevelings in te sluit oor die minimum prosedures wat maatskaapye moet instel rakende korporatiewe beheer, asook volhoubaarheidsbestuur en verslagdoening. King (II) volg die wereld-wye tendens van "triple-bottom-line", wat beteken dat die maatskaapy sy verantwoordelikheid teenoor belanghebenes in ag neem tydens die formulering van strategie. Kostebesparings is waarskynilik die belangrikste motivering vir die inagneming van volhoubaarheid. Die maatskappy kan kostes bespaar deur omgewingsverbeterings aan te bring wat onmiddelik 'n effek op die netto wins sal he. Maatskappye kan ook finansiele-, reputasie- en politieke risiko verminder deur met die belanghebendes saam te werk. Deur die bekommernisse en belange van werknemers, kliente, nie-regerings organisasies, politiekusse en besigheidsvennote te verstaan, help 'n maatskappy om die omgewings en sosiale verwagtinge beter te bestuur. Dit sal lei tot die vermindering van die risiko vir siviele aksies, 'n verbetering in die toegang tot kapitaal en versekering, kostebesparings en 'n vermindering in die kwesbaarheid as gevolg van vernaderinge in regulasies. 'n Ander oorweging is die vermeiding van 'n strategiese nadeel. Deur nie te reageer op omgewings geleenthede nie, terwyl die kompitisie dit wel doen, kan lei tot 'n kompiterende nadeel. Korporatiewe beheer is die proses van besluitneming en die proses waardeur besluite geimplementeer word. Indien korporatiewe beheer gaan oor die deursigtigheid van besluite en die bevordering van aandeelhouerswelvaart, en volhoubaarheid gaan oor die versekering van lantermyn sukses, dan is volhoubaarheid die kern van korporatiewe beheer. Die handhawing van 'n balans tussen die twee aspekte is 'n integrale deel van korporatiewe beheer en 'n uitdaging vir die direksie. Dit sal slegs behaal word indien daar aktiewe deelname is van alle belanghebbendes en die nodige aandag gegee word aan gesondheids-, veiligheids- en omgewingsake. Die direksie is verantwoordelik vir hierdie uitdagings. Die direksie moet ook verseker dat die volhoubaarheids verantwoordelikhede behoorlik gedelegeer word en dat die strategie en beleid geimplementeer word deur die effektiewe gebruik van 'n direksie verteenwoordiger vir volhoubaarheid, 'n direksie komittee vir volhoubaarheid en senior bestuur. Die inagneming van volhoubaarheids aspekte deur direkteure kan lei tot nuwe geleenthede vir die maatskappy. Deur die geleenthede te ignoreer kan die maatskappy se kompeterende posisie beinvloed. Die maatskappy en sy direkteure kan ook verantwoordelik gehou word deur nie met die nodige sorg op te tree nie. Die direksie moet bewus wees van die maatskappy se verpligtinge, as gevolg van die volhoubaarheids verantwoordelikhede, oor die lewenstydperk van sy aktiwiteite, produkte en dienste en die nodige voorsiening maak vir die finansiele laste en dit kommunikeer aan alle belanghebbendes. Die direkteure moet ook bewus wees van dit wat volhoubaarheid kan bedreig en die nodige stappe neem om die maatskappy te beskerm - 'n kwessie van risikobestuur. Dit is ook eerder 'n belegging, as 'n koste. Soos met enige belegging, moet die maatskappy die nodige bronne vind en die opbrengs oorweeg. Daar is verskeie gevalle waar die opbrengs vinnig en wesenlik was en dit is bewys dat deur hierdie aspekte aan te spreek, dit lei tot koste besparings en nie tot additionele kostes nie. Verskeie Suid-Afrikaanse maatkappye, soos Anglo American, BBP Billiton, Eskom, Sasol en SAB het begin om die volhoubaarheidsproses uit te rol in die besigheidsgemeenskap. Twee studies (Sasol en Nestle) oor maatskappye wat volhoubaarheidsontwikkeling natreef as deel van hulle korporatiewe beheer, word aangebied. Aanbevelings is natuurlik nie 'n versekering teen ondergang nie, maar direksies kan begin met veranderinge wat tesame sal lei tot 'n vroee waarskuwing stelsel: 1. Hersamestelling van die direksie; 2. Monitering en evaluering van die direksie; 3. Samestelling van 'n Volhoubaarheids Kommitee Die studie het bewys dat, deur nodige standaarde en beheer, die langtermyn verdienstes verhoog en aandeelhouerswelvaart bevorder word.

Thesis (MBA)--Stellenbosch University, 2004. / ENGLISH ABSTRACT: Corporate governance has become the latest business "buzz-word" during the last number of years. It is almost being used as an excuse for too many things that go wrong with, or within, companies. However, the word is not going to disappear from business lexicon, it has come to stay. Too many companies and investors have suffered due to the greed of individuals, appointed to lead and manage the business that have misused their position of trust and enriched themselves in many ways. This could have been brought about by many reasons: • Directors who have not been trained properly for their fiduciary duties and other duties and responsibilities. • Directors who have not been evaluated on their performance as a board or individually. • No formal governance structures within the organisation. • No culture of accountability within the organisation. • Simple greed. This study concentrates on some of the literature, ranging from the Cadbury report released in 1992, the OECD principles and international trends, to the South African King II Report, released in 2002. From the literature, and the recommendations from it, there can be no doubt that the pressure to improve governance structures will become fiercer around the globe. Investors are taking it seriously and are willing to pay a premium for shares in a properly governed enterprise. Directors will have to sharpen their skills in being the primary instrument in preventing further corporate scandals. The importance of their accountability towards the company will be measured when board evaluation no longer is an exception, but the rule, in creating effective boards. Agricol Beherend Limited should be no exception. Although not required to formally comply with the recommendations of the King II Code, it can only be advantageous in striving to long-term sustainability. It is further concluded that entrepreneurship is at the heart of capitalistic society, the sphere in which businesses operate in creating wealth for their investors. This is where the influence and leadership abilities of non-executives play a vital role in creating the environment and culture for enterprises to flourish in. They have to determine the equilibrium between conformance and performance in keeping the entrepreneurial spirit alive, yet complying with best practice principles of corporate governance. / AFRIKAANSE OPSOMMING: Korporatiewe bestuur, of beheer, het oor die laaste aantal jare die nuutste gebruikswoorde in die besigheidsomgewing geword. Dit word feitlik as verskoning gebruik vir alles wat met, of binne-in, organisasies verkeerd loop. Desnieteenstaande, die woorde gaan nie van die algemene besigheidsspreektaal verdwyn nie, dit het gekom om te bly. Te veel maatskappye en beleggers het gely onder die hebsug van individue wat aangestel is om maatskappye te lei en te bestuur, maar wat hulle vertrouensposisie misbruik het om hulself op verskeie maniere te verryk. Dit kon deur 'n verskeidenheid van redes teweeggebring gewees het: • Direkteure wat nie behoorlik opgelei is in hulle fudisiëre pligte, asook ander pligte en verantwoordelikhede nie. • Direkteure wat nie behoorlik geëvalueer is op hulle prestasie as 'n raad of op individuele basis nie. • Geen behoorlike formele korporatiewe bestuursstrukture binne die maatskappy nie. • Geen kultuur van verantwoording binne die maatskappy nie. • Eenvoudige hebsug. Die studie konsentreer op sekere gedeeltes van die literatuur wat strek van die Cadbury verslag wat in1992 vrygestel is, die OECD beginsels en internasionale tendense, tot by die Suid-Afrikaanse King II verslag wat in 2002 verskyn het. Uit die literatuur, en die aanbevelings daarin vervat, kan daar geen twyfel wees dat die druk om korporatiewe beheerstrukture te verbeter in die toekoms, wêreldwyd, slegs groter sal word nie. Beleggers is besig om ernstig daarna op te let en is selfs bereid om 'n premie te betaal vir aandele in 'n organisasie wat behoorlike korporatiewe bestuur toepas. Direkteure sal hulle vaardighede moet opknap, aangesien hulle die primêre instrument is om verdere korporatiewe skandale te voorkom. Die belangrikheid van hulle verantwoording teenoor die maatskappy sal gemeet word wanneer die evaluering van direksies nie meer die uitsondering is nie, maar die reël, in die samestelling van effektiewe direksies. Agricol Beherend Beperk behoort geen uitsondering te wees nie. Alhoewel dit nie verlang word om formeel aan die aanbevelings van die King II Kode te voldoen nie, kan dit slegs tot voordeel wees in die strewe na langtermyn volhoubaarheid. Die verdere gevolgtrekking is dat entrepreneurskap die kern vorm van 'n kapitalistiese bestel, die ruimte waarin besighede opereer om welvaart vir beleggers te skep. Dit is waar die invloed en leierskapsvaardighede van nie-uitvoerende direkteure 'n belangrike rol speel in die skepping van 'n omgewing en kultuur waarbinne besighede kan floreer. Hulle moet die ekwilibrium bepaal tussen voldoening en prestasie, deur 'n gees van entrepreneurskap, terwyl daar voldoen word aan beste korporatiewe bestuursbeginsels.

Thesis (MBA)--Stellenbosch University, 2002. / What, if any, is the relation between Corporate Governance and Corporate Social Responsibility? "Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The corporate governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society" (Cadbury, 2000). The World Bank notes, that there is no single model of corporate governance with systems varying by country, sector and even in the same corporation over time. Among the most prominent systems are the US and UK models, which focus on dispersed controls; and the German and Japanese models which reflect a more concentrated ownership structure. Recently, South Africa's own King Report II on corporate governance is getting more and more international acclaim. Corporate social responsibility is concerned with treating the stakeholders of the firm ethically or in a socially responsible manner. Stakeholders exist both within a firm and outside. Consequently, behaving socially responsibly will increase the human development of stakeholders both within and outside the corporation. For instance the OECD (Organisation for Economic Co-operation and Development) principles imply that a key role for stakeholders is concerned with ensuring the flow of external capital to firms and that stakeholders are protected by law and have access to disclosure (OECD,1998:15). While the World Bank have been intrigued by a June 2000 Investor Opinion Survey of McKinsey (World Bank, 2000) that finds that investors say that board governance is as important as financial performance in their investment decisions and that across Latin America, Europe, the USA and Asia investors (over 80% of those interviewed) would be willing to pay more for a company with good board governance practices. "Poor governance" was defined by McKinsey as a company that has: • Minority of outside directors; • Outside directors have financial ties with management; • Directors own little or no stock; • Directors compensated only with cash; • No formal director evaluation process; • Very unresponsive to investor requests for information on governance issues. "Good governance" was defined by McKinsey as: • Majority of outside directors; • Outside directors are truly independent, no management ties; Directors have significant stockholdings; • Large proportion of director pay is stock / options; • Formal director evaluation in place; • Very responsive to investor requests for information on governance issues. In view of the new thinking regarding the function of boards of directors, this mini-thesis will focus particularly on the role of the independent director in corporate governance, with a specific review of the approach in the USA, Europe and South Africa. A proposed role for the independent director will be given, as well as some final conclusions and recommendations on the topic. Without a more complete study it would be immature to think that this paper could have a final say on the role of the independent director in corporate governance, rather it is intended as a stimulus for further research in this very contemporary area.

Thesis (MBA)--Stellenbosch University, 2003. / ENGLISH ABSTRACT: Corporate governance can be defined as the system by which corporations are directed and controlled. It looks at the institutional and policy framework for corporations - from their very beginnings, in entrepreneurship, through their governance structures, company law, privatisation, to market exit and insolvency. King II places the board of directors at the heart of a company's business and holds them responsible for everything the business did or failed to do. Ultimately corporate governance is about leadership with integrity. A company directorship should not be viewed as belonging to the right club, knowing the right people and collecting a nice cheque every year. Their duties and responsibilities require them to act with the utmost integrity and morality at all times. Failure to do so can result in the demise of a company, a bank or even ... a country. The main objective of this short dissertation is to describe the importance of the role of Corporate Governance within the South African framework, with a focused look at the principles of King I and II. Specific focus is placed on the strength of the fiduciary responsibilities of the board of directors (King II) within the banking environment based on three case studies namely Unifer, Regal and Saambou. / AFRIKAANSE OPSOMMING: Korporatiewe bestuur kan gedefinieer word as die sisteem waarmee organisasies beheer, bestuur en gekontroleer word. Daar word gekyk na die institutionele en beleids raamwerk van organisasies - van die begin, in entrepreneurskap, deur hul korporatiewe strukture, korporatiewe reg, privatisering, tot mark ontrekking en bankrotskap. King 2002 beskou die raad van direkteure as die hartklop van enige organisasie en hou hulle kollektief verantwoordelik vir alles wat die besigheid doen of nie doen nie. Korporatiewe bestuur gaan in beginsel oor leierskap met integriteit. Om die regte mense te ken, aan die regte klub te behoort en elke maand 'n lekker tjekkie te ontvang is nie waaroor direkteurskap gaan nie. As gevolg van hul verantwoordelikhede en verpligtinge word daar verwag dat hulle altyd met integriteit en moraliteit optree. As dit nie gedoen word nie kan dit lei tot die verval van die organisasie, 'n bank of selfs .... 'n land. Die doel van hierdie kort mini-werkstuk is om te verduidelik hoekom korporatiewe bestuur belangrik is in die konteks van Suid Afrika. Daar sal verwys word na die beginsels van King 1994 en King 2002. Spesifieke fokus sal geplaas word op die trustee rol van direkteure in die bank omgewing en word geevalueer aan die hand van drie gevallestudies naamlik Unifer, Regal en Saambou.

Thesis (MBA)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: Newspaper headlines have continued to shock investors and society by exposing corporate scandals and by highlighting the overall decline in moral fibre of the modern employer and/or employee, locally and internationally. The King III Report on Governance aims to improve organisations’ sustainability by providing principles to enable sound decision-making for any organisation, irrespective of its size and/or structure. The objective of this research report was to investigate the challenges experienced with the application of these principles, with a specific focus on the guidance provided to enable the independence of directors. Firstly, this investigation aimed to establish whether there was a belief that the application of these principles would necessarily lead to sustainability; and secondly, whether the application of these principles were practically possible for all organisations, irrespective of their size and/or structure. The investigation was conducted by combining the results from a literature review on corporate governance with a specific focus on director independence and a survey conducted with twelve individuals involved in different capacities at board level. Based on the information obtained from the literature review and the results obtained from the questionnaire, overwhelming support exists that indicates that the application of the King III principles would contribute to improve the sustainability of an organisation. However, it was discovered that it would not necessarily be feasible for all companies, of any size and/or structure, to effectively apply these principles. Various recommendations were made to address the challenges identified for the effective application of the King III principles relating to the independence of directors.

published_or_final_version / Business Administration / Master / Master of Business Administration

AIMS OF THE RESEARCH: To explore the decision making processes of top management, CEO's and boards of directors - to gain ne~ insights into the causes of management decision failures, management risk and decision process weaknessess. To identify important factors that play a pivotal role in effective decision making in business situations. To draw up a frame~ork for effective decision making based on the correlations between decision theory and empirical findings amongst senior executives and board members. To find ways how management can minimize the risk of decision failure in complex problems, what questions they have to ask themselves about the way in which they make decisions, what decision risks they have to be aware of at each stage of the decision process and how they can gain from available decision theory. The aim is to improve the decision process to obtain better overall quality of decisions produced by kno~ledgeable senior managers and board members. This will provide a framework for effective third generation risk management. EXECUTIVE SUMMARY OF THE RESEARCH FINDINGS Board members and top executives rely on experience and personal knowledge to analyse complex problems and do not consciously involve concepts from decision theory (see section 8.5). They describe these phenomena in their organisations, but they have not formally done a decision process analysis to minimise decision risk. Current risk management practises in modern financial institutions focus mainly on risk classification techniques and structural mechanisms (see section 15) to control risks, with little or no attention to decision process dynamics. The Board of Directors and Top Management are generally very good at identifying corporate risks, economic risks and financial risks, but they have great difficulty in identifying internal decision process risks within the management hierarchy/system or amongst themselves. Introspective analysis of their own decision process dynamics can help to improve this. A step by step analysis of the decision process in the board and top management team as described in section 18.2 is proposed as a further contribution to improve the quality of decision making in financial institutions. Structural changes to boards like those introduced by Cadbury improved second generation risk management practices. This research proposes that further advances can be made by third generation risk management improvements in the decision process dynamics. We teach decision makers about economic and financial analysis and derivatives and risk management, but the fundamentals of decision science and the human decision process seem to be ignored. To prevent the financial failures that so often destroy shareholder value, we need to focus on decision science and financial decision process analysis Analysis of the decision process dynamics is proposed as a way to reduce the number of decision failures in large financial institutions and other organisations. By increasing the a~areness and kno~ledge of board members and top executives about the potential causes of decision failure, their own ability to identify and prevent these will be improved. New risk management structures and recent changes to board structures have contributed greatly to corporate governance but could not prevent many of the financial failures. Combining these structural improvements with an additional focus on decision process analysis can increase our ability to manage risk successfully. / Business Leadership / DBL

I investigate the association between independent directors' monitoring roles as distinguished by whether they reside on the audit committee (ACs) or not (NACs) and their respective ownership and whether Section 301 or a proxy for alternative independent monitoring (the percentage of institutional ownership) affects this relation. Specifically, I examine whether the objectivity required of serving as an AC (consistent with their audit function role) or alignment with investors (consistent with agency theory) dominates in determining independent directors' level of share ownership. Using generalized estimations of equations I provide evidence that ACs hold less ownership than NACs that suggests differences with respect to independence in appearance/ alignment with shareholder interests not previously documented amongst independent directors. I also find evidence that Section 301 may contribute to this differential ownership while the presence of institutional ownership moderates this relationship. / by John Incardona. / Thesis (Ph.D.)--Florida Atlantic University, 2010. / Includes bibliography. / Electronic reproduction. Boca Raton, Fla., 2010. Mode of access: World Wide Web.

Agency theory proposes that the role of the board of directors is to control management (Fama & Jensen 1983). A structurally independent board, one with a high percentage of non-executive directors and a chairperson who is not the CEO, has been used as a proxy for the control role. Therefore, agency theory predicts a positive relationship between independent board structure and firm performance. These predictions have not been confirmed by meta-analytic reviews (Dalton, Daily, Ellstrand, & Johnson 1998; Rhoades, Rechner, & Sundaramurthy 2000). This thesis applies structural contingency theory to provide an alternative explanation for the relationship between board structure and firm performance. Structural contingency theory (Donaldson 2001) proposes that the relationship between an organization???s structure and its performance is moderated by contingencies. In this study the contingency is the salience of the board???s control role. I argue that structural independence of the board has a beneficial effect on performance only if it is in fit with control salience. For example, a firm with an independently structured board that gives high prominence to the control role will perform well. On the other hand, another firm with a less independently structured board that does not see its main role as controlling management will also prosper. Survey data were analyzed to measure the control salience for 98 Australian listed companies. Archival data provided measures of board structure and firm performance. Consistent with the meta-analytic reviews, there was no association between independent board structure and firm performance. There was some evidence that high control salience resulted in high performance, but this effect was evident chiefly when performance was measured by total shareholder returns. This may indicate that the share market was responding to the symbolism of high control salience. In contrast to the symbolic main effect of control salience, the fit between the control salience and the independent structure of the board caused increased return on equity. This reflects the board???s objective effect on profit when its structure is in fit with control salience.