Introduction
Governance has existed in the form of company legislation for many years and is not recent phenomenon. Against a background of corporate turbulence in recent years, it has taken on a prominent role since the 1990’s. Beginning with the Cadbury report in 1992, a number of codes and practices have been introduced. These codes require U.K listed companies to comply with their provisions and recommendations on board structure and activities. Whilst good governance is deemed to promote corporate stability and shareholder confidence, it does not contribute to the bottom line and would not prevent corporate disasters such as Enron and WorldCom therefore a question comes to mind – will the shareholders and other stakeholders derive any benefit from the changes to the Combined Code if the Higgs report is adopted. Much of the focus has been on Institutional Investors, Executive directors and best practice codes, with improving the effectiveness, competency and efficiency of boards. As a result structural and operational aspects of corporate boards have been questioned. (Hermalin and Weisbach, 1998; John and Senbet, 1998; Frank et al, 2001). There has, to date been much comment and speculation but little rigorous research has been on non- executive directors who are most affected by the Higgs proposed changes to the Combined Code.
The context of my research will describe and discuss recent changes in the pattern of work of non-executive directors of large public limited companies in the U.K. An analysis will be made of the impact on their work of the series of reports and codes on the revised combined code which was published in the U.K.in 2003. This connected series of report and codes was initiated with the publication of the Cadbury Report in December 1992 and a revised version of the combined code published 2003. In my proposal and dissertation, I will refer to the series of revised reports and codes as the ‘Cadbury series’.
My research findings will be based on the views of a group of non-executive directors who, in 2003, would still have been on the boards of large public limited companies, which they would either have joined during, or prior to, 2003. The target companies will be constituents of FTSE 100 and 250 indexes and because most of these non-executive directors would have served on their boards throughout the changes initiated by the Cadbury series, they will be in the position to assess the impact of these changes on board behaviour within their individual companies.
Research Objectives
The main aims and objectives of the proposed research are:
To explore the structures and patterns of work in the past. In order to achieve this aim a series of interview questions and interviews will be developed to produce summary statistical measures concerning the era before the Combined Code came into force;
To examine and analyse the extent of separation of chief executive and chairman roles, and the proportion of chairmen who were independent at the time of appointment;
To establish the length of tenure of non-executive directors and chairmen along with an examination of the procedures regarding recruitment, appointment and the diversity, skills and expertise on the board; and
To analyse the impact of a Senior Independent director and relate this to a wider examination of the relationship with major shareholders.
Potential Impact of the Research
Higgs recommended in his report that the Government and the Financial Reporting Council measure the extent to which behaviour has changed as a result of his proposals and review the progress against his recommendations two years from the date of the review in July 2003. I trust that this research will add and or build upon other research currently being carried out by providing a wide –ranging perspective on the impact of Higgs proposal. Recording the opinions of non-executive directors through which we catch a glimpse of boardroom behaviour and its associated activities, will not only inform and enlighten fellow researchers and but will also, hopefully, stimulate further analyses on this topic and raise issues concerning contemporary trends and future developments in the corporate world of governance.
Research Methodology
As a qualitative research, it will be implemented in two phases. In the first instance, five to six areas of change proposed by Higgs will be the subject of discussion and my main focus of research. Names of non – executive directors will be drawn at random from a variety of public sources of NEDs at both FTSE 100 and FTSE 250 and where necessary lists of names will be purchased to facilitate the process. A questionnaire will be prepared and presented to the NEDs in question to compare the situation in 1992 /99 with that in 2003 in order to assess the level of change in their involvement and the involvement of their boards in defined tasks and activities.
The second phase of the research will be conducted through semi-structured interviews. They will be asked a series of questions, the responses to which will subsequently be used to test a series of research propositions about the impact of the Cadbury series. Where appropriate, the researcher will match the findings of the research conducted to the specific issues
Credit:ivythesis.typepad.com
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