UK Boards Research Articles

The lines that divide: Board demographic faultlines and proactive environmental strategy

AbstractManuscript TypeThe manuscript is of an empirical nature.Research Question/IssueThe current ecological crisis requires boards of directors to tackle environmental concerns and manage dependencies with the external environment in highly dynamic conditions. Proactive environmental strategies (PESs) seek to establish alternative and innovative processes and products that create new market opportunities. By mobilizing the notion of board demographic faultlines, we investigate their link with PESs and the influence of the internal board dynamics and environmental factors on this relationship.Research Findings/InsightsThe multilevel regression analysis of a 7‐year sample of UK boards reveals that demographic faultlines hinder their information processing in adopting PESs. The results also show that the negative relationship between demographic faultlines and PESs is attenuated by the social similarity of the CEO and chair in the same subgroup and by the financial materiality of the natural environment.Theoretical/Academic ImplicationsThis study draws on faultline theory to analyze how the structure of board diversity through the alignment of multiple directors' demographic attributes affects board dynamics by creating polarized boards that shape sustainability decisions. This study underscores the disruptive effect of having socially distanced subgroups within the board and the salience of board leaders' social similarity and environmental factors in attenuating their dysfunctional effects.Practitioner/Policy ImplicationsBoard diversity is considered key to improving board decision‐making. By situating our empirical investigation in a country with a corporate governance model that fosters diversity in a dual leadership board structure that has influenced other countries' governance models, this study provides insights for policymakers and market participants on the unintended effects of the global call for board diversity on firms' proactive environmental stance. Our results call for establishing procedures to incentivize board socialization and facilitate directors' information processing.

Striving for Diversity of Leadership: Governance in UK Higher Education Institutions

Diversity of membership on boards and governance bodies in a range of sectors have been shown to be a key element in successful boards and effectively lead, monitor and advise their executive. Much progress has been made on improving gender balance on boards, including in universities and higher education institutions (HEI). However, the (scant) literature on HEI boards highlights that higher education or university boards in the UK need to do more to tackle all the other forms of under-representation where limited progress has been made on diversity, other than gender. This paper thus has two main aims, the first to locate the work on developing the diversity of UK university boards within the wider (corporate) theory and literature in this field. This is because the literature in the corporate sector is better established and therefore there is something to learn from practice in this area. The second aim is to develop a practical toolkit to expedite board diversity in higher education to bring it in line with other sectors to enable them to reflect what the OECD believe should be the role of universities: which is to be at the cutting edge of leading societal change.
 This paper reports on quantitative and qualitative data collected and analysed in order to develop a practical Board Diversity Toolkit - the first national scheme of its kind. Data were collected from 44 HEIs, representing a third of the UK’s HEIs and 104 governors to inform the development of the Toolkit. The paper discusses the issues raised in the data that might be a key barrier to achieving diversity and addressing chronic under-representation in UK Boards. This centred around deep-seated attitudes on how diversity may compromise the skills needed on Boards and importantly how to unseat these ingrained (often unconscious) attitudes if we are to achieve genuine change at Board levels. The Board Diversity Toolkit, designed as an output of work, could play a key role in changing such attitudes and develop the UK HEI sector in terms of conducting board business better, as well as meeting the need to be representative of staff and student bodies.

Exploring processes in Spanish, German and UK boards: a measurement framework of board know-how, board diversity and directors’ interactions interrelation

PurposeSeveral empirical attempts have investigated boardroom processes and their impact on the governing team decision-making. Such attempts, however, have derived in inchoate results opening new methodological debates and leaving the underlying patterns of board processes obscure. This paper aims to shed light on these patterns by empirically examining the interrelation among the three central constructs involved in board decision-making: know-how, demographic diversity and directors’ social interactions.Design/methodology/approachA framework of interrelation among know-how, demographic diversity and social interactions was conceptually built and empirically validated with partial least squares structural equation modelling applied to archival data from a sample of 87 boards of directors of Spanish, German and UK listed companies.FindingsResults unmask the intricacies of behavioural processes involved in know-how-demography relation: demographic diversity contribution to know-how is totally and positively mediated by directors’ social interactions. This reveals the power of directors’ socialization frequency in determining processes and predicting know-how.Practical implicationsThe paper offers a new pathway to manage board know-how and to make board diversity effective. It also opens a door to an innovative empirical methodology to make board processes emerge, one that overcomes methodological limitations of previous efforts.Originality/valueThis is so far the only study that examines and measures holistically the structural interrelation among the three central constructs determining board decisions and performance: know-how, diversity and social interactions.

Induction of labour during the COVID-19 pandemic: a national survey of impact on practice in the UK

BackgroundInduction of labour (IOL) is one of the most commonly performed interventions in maternity care, with outpatient cervical ripening increasingly offered as an option for women undergoing IOL. The COVID-19 pandemic has changed the context of practice and the option of returning home for cervical ripening may now assume greater significance. This work aimed to examine whether and how the COVID-19 pandemic has changed practice around IOL in the UK.MethodWe used an online questionnaire to survey senior obstetricians and midwives at all 156 UK NHS Trusts and Boards that currently offer maternity services. Responses were analysed to produce descriptive statistics, with free text responses analysed using a conventional content analysis approach.FindingsResponses were received from 92 of 156 UK Trusts and Boards, a 59% response rate. Many Trusts and Boards reported no change to their IOL practice, however 23% reported change in methods used for cervical ripening; 28% a change in criteria for home cervical ripening; 28% stated that more women were returning home during cervical ripening; and 24% noted changes to women’s response to recommendations for IOL. Much of the change was reported as happening in response to attempts to minimise hospital attendance and restrictions on birth partners accompanying women.ConclusionsThe pandemic has changed practice around induction of labour, although this varied significantly between NHS Trusts and Boards. There is a lack of formal evidence to support decision-making around outpatient cervical ripening: the basis on which changes were implemented and what evidence was used to inform decisions is not clear.

Leading through discontinuous change: A typology of problems and leadership approaches in UK boards

Discontinuous change and leadership behavior are subjects that have been extensively studied, but rarely from the directors’ perspective. This study draws on in-depth, elite interviews with directors of large UK listed companies. It applies a grounded theory approach to data analysis, to explore how problems arising from discontinuous change influence board leadership dynamics and outcomes. The findings indicate that, when facing “wicked problems” (internal-relational or external-hostile), the chair of the board either takes the leadership role or a collaborative, joint leadership role with the CEO. When facing “tame” problems (transformational-internal or industry-external), a new CEO is often appointed to undertake an extensive diagnosis of the problem and take the lead, with the chair acting as a vigilant monitor. These findings are integrated into a typology of problems and board leadership approaches, augmenting the literature on complex problems. The study extends the application of agency and stewardship theories of board leadership by characterizing problems as contingencies that influence board leadership arrangements. It follows that regulators and boards alike should recognize the contextual nature of board leadership and leadership succession, and adopt a less prescriptive approach.

Editorial boards of accounting journals: gender diversity and internationalisation

PurposeEditorial boards of academic journals represent a key institutional mechanism in the governance and functioning of the academic community. Board members play an important role in knowledge production and development of the discipline. The purpose of this paper is to enquire into the diversity characteristics of boards of accounting journals.Design/methodology/approachDrawing on a diversity framework that distinguishes between societal diversity and value of diversity, the paper examines two board characteristics: gender diversity and internationalisation. Moreover, it examines the influence of three journal and two editor characteristics on board diversity and analyses trends over time.FindingsOn gender, overall board trends are consistent with societal diversity and value of diversity: boards reflect the gender profile of senior academics. Further, female representation on boards is broadly consistent across the different journal nationalities; has improved over time; has experienced a convergence in “gender sensitive” sub-disciplines; and is influenced by female editorship. However, inequities appear to be present at the highest level: women appear to be less well represented than men as editors and women also have a lower representation on boards of higher ranked journals than on those of lower ranked journals. On internationalisation, once again, overall trends broadly reflect societal diversity and value at diversity. However, international scholars are less well represented on 4* boards than on 2* and 3* boards and on US boards than on Australian and UK boards. Further, there are signs of weakening US dominance in non-US journals.Originality/valueDrawing on the diversity framework, this is the first study to comprehensively examine gender diversity and internationalisation of accounting boards.

A Typology of Problems and Leadership Approaches in UK Boards

This study draws on 30 semi-structured, in-depth interviews with UK executive and non-executive board directors across 18 sectors. The paper explores the leadership approaches called upon to addres...

Remuneration of non-executive directors: Evidence from the UK

This study examines the remuneration of non-executive directors, examining individual monitoring characteristics and director capital in addition to firm characteristics. Using a large sample of FTSE All-Share non-executive directors from 2001 to 2012, we find that remuneration is positively linked to both directors' individual characteristics and firm characteristics. We find that director age, tenure, and network size are positively related to remuneration, suggesting that directors' ability to contribute to board decision-making and their set of resources are valued by firms. We find that director remuneration is negatively related to monitoring characteristics such as director independence, suggesting possible agency considerations, as effective monitors of top management are paid less. However, director ownership has a non-linear relationship with remuneration, and is substitutive at higher levels of ownership. We also observe that UK boards are relatively homogeneous, with few female directors and even fewer Chairmen, and find strong evidence of a gender gap in remuneration when examining inter- and intra-firm variations. Our findings have implications for regulators who seek to intervene in board appointments, as they indicate that firms do not necessarily value or reward resources brought by female or independent directors.

Faecal microbiota transplantation for Clostridium difficile infection in the United Kingdom

Faecal microbiota transplantation (FMT) has been shown to be highly effective in treating recurrent Clostridium difficile infection, but to date there have been no data from the United Kingdom. An electronic survey was developed at Portsmouth Hospitals' National Health Service (NHS) Trust and sent out to UK hospital specialists utilizing the contact databases of the British Infection Association and the Royal College of Gastroenterologists. A total of 162 responses were received, representing nearly one in every seven of the United Kingdom's infection specialists and a response from one in every two UK NHS acute trusts or boards. Ninety-six per cent believe that the evidence base supports the use of FMT, and 94% reported consulting on at least one patient a year in whom they would recommend FMT. However, only 22% reported FMT use in their institution in the last 10 years, and 6% reported performing more than ten FMTs in the last 10 years. Concerns with patient acceptance, donor selection, availability of screened faecal solution, feasibility of procedure and availability of local expertise were reported as inhibiting the use of FMT. More than 90% of respondents would like access to regional guidelines, prescreened faecal solution and expert advice to facilitate implementation, and more than two thirds of respondents would support a regional FMT referral centre. A large gap exists in the United Kingdom between physicians desire to use FMT and the ability and facilities to provide it as a therapy at the bedside.

Diversity and Conflict in Boards of Directors

This study seeks to contribute to the debate on board behavior by investigating how deeper-level diversity, specifically differences in personality, interacts with demographic diversity to explain board cognitive and affective conflict. Using survey data from a pilot study of 98 directors in 16 UK boards, we show that dissimilarities in personality traits are negatively related to cognitive conflict, but this relationship is moderated by gender and tenure diversity. Personality differences do not explain affective conflict. The study provides insights into how theories from psychology may help us understand antecedents to board behaviors.

Chartered accountant and public accounting experience non-executive directors on UK boards: Signals of quality earnings reporting to investors prompting price-to-earnings growth

This research seeks to determine for the first time whether the presence of non-executive directors with chartered accountant and public accounting financial expertise on UK boards is important to investors in terms of signaling higher reporting quality. If so, investors should be willing to give higher premiums on stock prices over earnings than for companies with boards without these financial expertise characteristics. In this era not so distant from Enron and Parmalat, investors should value these characteristics to be present in evaluating the external and internal audits in financial reporting. The average price-to-earnings growth for companies with these board characteristics is 145.11 percent compared to an average decrease of 99.85 percent for those companies that do not

Female Directors And Firm Characteristics: A USA UK Comparison

Shareholders and other stakeholders are placing an increasing emphasis on corporate governance. The composition of a board is an important aspect of corporate governance. There is some evidence that gender diversity in the boardroom has an impact on the operations of a company. Both U.S. and UK corporations are increasing female representation on their boards. The purpose of this particular study is to compare gender diversity on U.S. and UK boards, and investigate some firm characteristics that may be associated with above or below average female representation.

The impact of board size on firm performance: evidence from the UK

We examine the impact of board size on firm performance for a large sample of 2746 UK listed firms over 1981–2002. The UK provides an interesting institutional setting, because UK boards play a weak monitoring role and therefore any negative effect of large board size is likely to reflect the malfunction of the board's advisory rather than monitoring role. We find that board size has a strong negative impact on profitability, Tobin's Q and share returns. This result is robust across econometric models that control for different types of endogeneity. We find no evidence that firm characteristics that determine board size in the UK lead to a more positive board size–firm performance relation. In contrast, we find that the negative relation is strongest for large firms, which tend to have larger boards. Overall, our evidence supports the argument that problems of poor communication and decision-making undermine the effectiveness of large boards.

The determinants of board size and composition: Evidence from the UK

This paper examines the trends and determinants of board structure for a large sample of UK firms from 1981 to 2002. We extend the predominantly US based literature in a number of important ways. Firstly, a comparative analysis of the UK and US legal and institutional settings leads us to hypothesize that UK boards will play a weaker monitoring role and hence board structures will not be determined by monitoring related factors. Our evidence supports this conjecture, showing that board structure determinants differ in predictable ways across different institutional settings. Secondly, in contrast to recent US mandatory reforms, UK reforms have been voluntary. As such they provide an interesting comparison, being arguably more effective than a mandatory approach by allowing firms to choose board structures most appropriate for their own needs. Our results support this point of view. Although the UK reforms do have a significant impact on board structures, a large number of firms choose not to comply, and those that do appear to do so for strong economic reasons. The reforms also appear to reduce the ability of well performing CEOs to influence board structures.

Newly appointed directors in the boardroom:: How do women and men differ?

Summary This paper investigates the human capital profile of new appointees to corporate boards, exploring gender differences in education, profile and career experiences. Findings from a study of UK boards reveal that women are significantly more likely to bring international diversity to their boards and to possess an MBA degree. New male directors are significantly more likely to have corporate board experience, including CEO/COO roles, while new female appointees are significantly more likely to have experience as directors on boards of smaller firms. Our evidence contradicts the view reported by some chairmen that women lack adequate human capital for boardroom positions.

The composition of editorial boards in accounting: a UK perspective

PurposeThe purpose of this research is to examine the composition of the editorial boards of 60 academic accounting journals with a particular focus on the university affiliations of editorial board members. The role of ad hoc reviewers is then analysed.Design/methodology/approachA detailed content analysis of the members of the 60 editorial boards was conducted. The authors concentrated on UK universities and journals, but also provide some data on non‐UK schools and journals.FindingsThere were six main findings. First, editorial appointments were normally held by nationals of the country where the journal was published. Second, US academics had a significant presence on all boards. Third, there was a lack of penetration of UK academics, particularly on US or high quality boards. Fourth, overseas academics were present in significant numbers on UK boards. Fifth, editorial board appointments tended to be concentrated in a limited number of institutions and individuals. Sixth, journals, particularly generalist journals, used reviewers extensively.Practical implicationsThis research will inform the debate about the degree of influence which UK academics have on journal research agendas and on the international stage. The findings show that journal editorial boards do not capture all high ranking institutions and individuals. Editors could consider widening the scope of their editorial board opportunities.Originality/valueThis is the first comprehensive study into the editorial boards of accounting journals. It shows the presence of an editorial board elite.

An Analysis of Changes in Board Structure during Corporate Governance Reforms

Abstract This study examines the evolution of company board structure during a period of corporate governance reform. Using data over a time period following the publication of the Cadbury Report (1992) we present evidence of an increase in the independence of UK boards, as measured by an increased willingness to employ independent non‐executive directors, and to separate the positions of the CEO and the Chairman of the Board. In examining the determinants of these changes, we find that boards change more readily in response to changes in managerial control, equity issuance and corporate performance than changes in the firm‐specific operating environment of companies.

The Role of the Non-executive Director: findings of an empirical investigation into the differences between listed and unlisted UK boards

This study, based on a comparison of the Combined Code Guidelines for non-executive directors between listed and unlisted boards, suggests that on unlisted boards non-executive directors have a greater degree of involvement in strategic development, financial monitoring, shareholder communication and overall board contribution than on listed boards, but a lesser degree of involvement in the monitoring of management, the setting of executive remuneration, the appointment and removal of executives, and succession planning. The importance of risk analysis and induction is considered high across both sectors, although board development and independence is considered less important on unlisted boards.

Why So Few Women Directors in Top UK Boardrooms? Evidence and Theoretical Explanations

Using evidence from a survey of women directors in FTSE 100 companies, this paper considers possible explanations for the persistent homogeneity of top UK boards. Only 61 per cent of the top 100 companies had female directors in 2002, down from 64 per cent in 1999. Women held only 3 per cent of executive (= US inside) directorships, and there were only 15 women executive directors in total. Explanations usually include women's lack of ambition, lack of experience and lack of commitment. These have been disproved by research, but underlying theories of social exclusion may provide insight into this persistent phenomenon.

The Corporate Governance Evolution

This article addresses the following key points: Shareholder engagement is growing in the UK, driven by regulatory initiatives and shareholder self-interest. The Combined Code now recommends a 50/50 split between executives and non-executives on UK boards. Executive remuneration is now subject to greater transparency and a shareholder vote at meetings. AIMR has established a task force on Global Corporate Governance to help members navigate the issues.