The Cadbury Code Reforms and Corporate Performance

Travlos, Nickolaos G.; Weir, Charlie; Milonas, Nikolaos T.; McKnight, Phillip J.

doi:10.2139/ssrn.675627

The Cadbury Code Reforms and Corporate Performance

EFA 2005 Moscow Meetings

29 Pages Posted: 8 Mar 2005

See all articles by Nickolaos G. Travlos

Nickolaos G. Travlos

University of Surrey; ALBA Graduate Business School

Charlie Weir

Robert Gordon University - Aberdeen Business School

Nikolaos T. Milonas

National and Kapodistrian University of Athens - Faculty of Economics; Cardiff University Business School

Phillip J. McKnight

University of St. Andrews - School of Management

Date Written: January 15, 2005

Abstract

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

Travlos, Nickolaos G. and Weir, Charles and Milonas, Nikolaos T. and McKnight, Phillip J., The Cadbury Code Reforms and Corporate Performance (January 15, 2005). EFA 2005 Moscow Meetings. Available at SSRN: https://ssrn.com/abstract=675627 or http://dx.doi.org/10.2139/ssrn.675627