Corporate governance has become an increasingly topical issue in recent years. This
has been fuelled by such corporate collapses as Enron, Worldcom, Parmalat, One.Tel
and HIH. The role and responsibility of the board and directors has emerged as an
important issue in examining the cause of these collapses. This has created much
debate on what the role of the directors is in 'directing', 'monitoring' or 'advising' a
company.
Research indicates that investors are prepared to a pay a premium for good
governance. This raises a number of questions. What is governance? How do we
determine what is good governance? What role do directors have in this? Does the
company's performance improve by adopting good governance practices?
There are numerous approaches to examining what makes a good board. Quantitative
techniques have included the use of such measurable concepts as the number of
executive and non-executive directors, directors' skill base (for example,
accountancy, marketing etc) and frequency of meetings attended. Researchers have
also attempted to measure board performance and effectiveness by using indicators
such as share values and shareholder returns.
There is a lack of qualitative research in board behaviour and effectiveness. This
exploratory study adopts a qualitative approach in order to provide richer data. It uses
interviews to evaluate directors' views on some aspects of corporate governance,
specifically in relation to the executive and non-executive director debate. The
interviews were conducted with 11 directors from a variety of organizations in the forprofit
and not-for-profit sectors.
Two major themes have emerged from the analysis of the interviews. Firstly, directors
are traditionally considered to be responsible for maximising shareholder wealth.
However, directors are now expected to broaden their responsibilities to include other
stakeholders and to consider social and environmental issues in making their
decisions. The findings indicate that it is now more demanding to be a director due to
increased workloads arising from the regulatory and legal requirements. This has also
impacted on director and board evaluations, multiple directorships and directors
remuneration levels.
The second major theme that emerged from this study is that directors' personal
experiences did not necessarily concur with governance principles and guidelines. For
example, the widely recommended method of achieving 'best practice' by having a
majority of non-executive directors on a board is considered too simplistic.
Further studies are required on the behavioural and personality traits, technical skills
of the directors, board structure, composition and type of organization which make the
best contribution to achieving boardroom effectiveness.
| Identifer | oai:union.ndltd.org:ADTP/216594 |
| Date | January 2006 |
| Creators | Siladi, Biserka, n/a |
| Publisher | Swinburne University of Technology. |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Rights | http://www.swin.edu.au/), Copyright Biserka Siladi |
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