The Determinants of Non-Executive Representation on the Boards of Large UK Companies

Noel O'Sullivan

Journal of Management & Governance, 2000, vol. 4, issue 4, 283-297

Abstract: An important aspect of current governance practice is theutilisation of non-executive directors to monitor the behaviourof senior management. The purpose of this paper is to provide aninitial insight on the determinants of non-executiverepresentation on the boards of large UK companies. The studyadopts an agency theory perspective, focusing specifically on theimpact of company size and ownership on non-executiverepresentation. I find that larger companies, where monitoringvia ownership is expected to be less efficient, utilise higherlevels of non-executive representation. I also find thatnon-executive representation is positively associated with theownership of external blockholders. The presence of CEO/chairmanduality has a negative impact on non-executive representation. Overall, the findings suggest that companies utilise boards withstronger monitoring potential when size and ownershipcharacteristics suggest that alternative governance mechanismsmay be unable to ensure managers pursue shareholders' interests. Copyright Kluwer Academic Publishers 2000

Keywords: corporate governance; non-executive directors; ownership structure (search for similar items in EconPapers)
Date: 2000
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DOI: 10.1023/A:1009941919650

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