An Analysis of Board of Director Appraisal Disclosures in Australia and the United States

Business Law Review, Vol. 41, No. 5, 2020, pp. 160-171

30 Pages Posted: 21 Oct 2020

See all articles by Ian Ramsay

Ian Ramsay

Melbourne Law School - University of Melbourne

Mihika Upadhyaya

Melbourne Law School, University of Melbourne

Date Written: May 22, 2020

Abstract

Appraisals of boards of directors are now well established and viewed as important contributors to the effectiveness of boards. Because board appraisal practices vary between companies and the benefits of an appraisal will only be obtained where an appropriate practice is followed, there is significant interest in the board appraisal practices adopted by companies. The authors first outline the benefits and challenges of board appraisals and identify the key features of an effective board appraisal. They then present the results of their study of how board appraisals are conducted in Australia in relation to large and small listed companies and compare the findings with the board appraisal practices of US Fortune 100 companies.The results of the study show that the largest Australian listed companies outperform smaller listed companies on nearly all measures relating to the quality of board appraisals, including: the breadth of subjects evaluated, how often the appraisal is conducted, how often the appraisal is externally facilitated, the breadth of techniques used to gather data when conducting the appraisal, and the level of detail in the disclosure of the results of the appraisal. No stark differences emerge when comparing both groups of Australian companies with the largest US companies, with the exception that the largest Australian companies performed significantly better than the US companies when it came to the frequency of externally facilitated appraisals.

Keywords: director appraisal; board appraisal; corporate governance

Suggested Citation

Ramsay, Ian and Upadhyaya, Mihika, An Analysis of Board of Director Appraisal Disclosures in Australia and the United States (May 22, 2020). Business Law Review, Vol. 41, No. 5, 2020, pp. 160-171, Available at SSRN: https://ssrn.com/abstract=3688677

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Mihika Upadhyaya

Melbourne Law School, University of Melbourne

185 Pelham Street
Melbourne, VIC 3010
Australia
3010 (Fax)

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