Is Board Composition Important? A Study of Listed Australian Companies

49 Pages Posted: 31 Jan 2000

See all articles by Jeffrey J. Lawrence

Jeffrey J. Lawrence

Salomon Smith Barney

Geofrey P. Stapledon

University of Melbourne - Law School

Date Written: September 1999

Abstract

This paper examines the impact of board composition on corporate performance and executive remuneration in large Australian companies. In particular, we focus on the proportion of independent directors on the board. Whether corporate performance is assessed using accounting or share-price measures, our studies produce no consistent evidence that independent directors either add or destroy value. Similarly, the studies show no link between the proportion of independent directors on the board and the level or manner of remuneration of the CEO. We conclude that any benefits flowing from the introduction of prescriptive corporate governance requirements may well be outweighed by the compliance costs.

JEL Classification: G30, G34, K22

Suggested Citation

Lawrence, Jeffrey J. and Stapledon, Geofrey P., Is Board Composition Important? A Study of Listed Australian Companies (September 1999). Available at SSRN: https://ssrn.com/abstract=193528 or http://dx.doi.org/10.2139/ssrn.193528

Jeffrey J. Lawrence

Salomon Smith Barney ( email )

Level 26
101 Collins Street Investment Banking
Melbourne VIC 3000
Australia
+61-3-9940-7604 (Phone)
+61-3-9940-7613 (Fax)

Geofrey P. Stapledon (Contact Author)

University of Melbourne - Law School ( email )

Victoria 3010
Australia
+61 3 8344 8916 (Phone)
+61 3 8344 9971 (Fax)

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