Characterizing the corporate governance of UK listed construction companies

Abstract

In response to the emergence of scandals involving many high‐profile companies during the 1990s, corporate governance is considered as an area requiring immediate reform. The government of the United Kingdom has conducted a series of reviews on corporate governance and incorporated the recommendations of these reports into regulatory codes. Compliance with these codes can be considered to indicate the implementation of best corporate practice. A question of interest is how UK construction companies perform in corporate governance. The answer can be revealed by comparing construction companies with the top 50 companies listed in the UK, based on the provisions of corporate governance codes. Construction companies are found to (1) disclose less corporate governance information; (2) display lower levels of structural board independence in terms of separate roles of chairman and chief executive officer (CEO) and percentage of independent directors; (3) rely less on external consultant advice in assisting the decision making of three board committees. Research thus should be conducted on whether these disparities cause adverse effects on construction company performance.