The Cadbury Code Reforms and Corporate Performance
EFA 2005 Moscow Meetings
29 Pages Posted: 8 Mar 2005
Date Written: January 15, 2005
This paper investigates the impact on corporate performance of UK firms from adopting the Cadbury Committee's Code of Best Practice. The findings show improved corporate performance for companies adopting the code. Regarding the specific recommendations of the Code, splitting the positions of the Chairman of the Board and CEO does not result in improved corporate performance. The establishment of an internal audit and/or remuneration committee is positively associated with corporate performance, while the presence of a key executive director in such committees is negatively associated with corporate performance. There is a negative association between corporate performance and the proportion of non-executive directors, but a positive relation between corporate performance and the square of the proportion of non-executive directors.
Keywords: Corporate Governance, Government Policy and Regulation
JEL Classification: G34, G18
Suggested Citation: Suggested Citation