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

Beyond shareholder primacy? Reflections on the trajectory of UK corporate governance.

Core institutions of UK corporate governance, in particular the City Code on Takeovers and Mergers, the Combined Code on Corporate Governance and the law on directors’ duties, are strongly orientated towards the norm of shareholder primacy. Beyond the core, however, stakeholder interests are better represented, in particular at the intersection of insolvency and employment law. This reflects the influence of European Community laws on information and consultation of employees. In addition, there are signs that some institutional shareholders are redirecting their investment strategies, under government encouragement, away from a focus on short-term returns, in such a way as to favour stakeholder-inclusive practices by firms. On this basis we suggest that the UK system is currently in a state of flux and that the debate over shareholder primacy has not been concluded

Governance tools for board members : adapting strategy maps and balanced scorecards for directorial action

The accountability of members of the board of directors of publicly traded companies has increased over years. Corresponding to these developments, there has been an inadequate advancement of tools and frameworks to help directorial functioning. This paper provides an argument for design of the Balanced Scorecard and Strategy Maps made available to the directors as a means of influencing, monitoring, controlling and assisting managerial action. This paper examines how the Balanced Scorecard and Strategy Maps could be modified and used for this purpose. The paper suggests incorporating Balanced Scorecards in the Internal Process perspective, ‘internal’ implying here not just ‘internal to the firm’, but also ‘internal to the inter-organizational system’. We recommend that other such factors be introduced separately under a new ‘perspective’ depending upon what the board wants to emphasize without creating any unwieldy proliferation of measures. Tracking the Strategy Map over time by the board of directors is a way for the board to take responsibility for the firm’s performance. The paper makes a distinction between action variables and monitoring variables. Monitoring variables are further divided on the basis of two considerations: a) whether results have been met or not and b) whether causative factors have met the expected levels of performance or not. Based on directorial responsibilities and accountability, we take another look at how the variables could be specified more completely and accurately with directorial recommendations for executives

Apollo 11 Reloaded: Optimization-based Trajectory Reconstruction

This paper wants to be a tribute to the Apollo 11 mission, that celebrated its 50th anniversary in 2019. By using modern methods based on numerical optimization we reconstruct critical phases of the original mission, and more specifically the ascent of the Saturn V, the translunar injection maneuver that allowed the crew to leave the Earth’s sphere of influence, and the Moon landing sequence, starting from the powered descent initiation. Results were computed by employing pseudospectral methods, and show good agreement with the original post-flight reports released by NASA after the successful completion of the mission

Communitarian perspectives on social enterprise

Concepts of social enterprise have been debated repeatedly, and continue to cause confusion. In this paper, a meta-theoretical framework is developed through discussion of individualist and communitarian philosophy. Philosophers from both traditions build social theories that emphasise either consensus (a unitarist outlook) or diversity (a pluralist outlook). The various discourses in corporate governance reflect these assumptions and create four distinct approaches that impact on the relationship between capital and labour. In rejecting the traditional discourse of private enterprise, social enterprises have adopted other approaches to tackle social exclusion, each derived from different underlying beliefs about the purpose of enterprise and the nature of governance. The theoretical framework offers a way to understand the diversity found within the sector, including the newly constituted Community Interest Company (CIC).</p

Governors and directors: Competing models of corporate governance

Why do we use the term ‘corporate governance’ rather than ‘corporate direction’? Early British joint stock companies were normally managed by a single ‘governor’. The ‘court of governors’ or ‘board of directors’ emerged slowly as the ruling body for companies. By the nineteenth century, however, companies were typically run by directors while not-for-profit entities such as hospitals, schools and charitable bodies had governors. The nineteenth century saw steady refinement of the roles of company directors, often in response to corporate scandals, with a gradual change from the notion of the director as a ‘representative shareholder’ to the directors being seen collectively as ‘representatives of the shareholders’. Governors in not-for-profit entities, however, were regarded as having broader responsibilities. The term ‘governance’ itself suggests that corporate boards should be studied as ‘political’ entities rather than merely through economic lenses such as agency theory

Governance, regulation and financial market instability: the implications for policy

Just as the 1929 Stock Market Crash discredited Classical economic theory and policy and opened the way for Keynesianism, a consequence of the collapse of confidence in financial markets and the banking system—and the effect that this has had on the global macro economy—is currently discrediting the ‘conventional wisdom’ of neo-liberalism. This paper argues that at the heart of the crisis is a breakdown in governance that has its roots in the co-evolution of political and economic developments and of economic theory and policy since the 1929 Stock Market Crash and the Great Depression that followed. However, while many are looking back to the Great Depression and to the theories and policies that seemed to contribute to recovery during the first part of the twentieth century, we argue that the current context is different from the earlier one; and there are more recent events that may provide better insight into the causes and contributing factors giving rise to the present crisis and to the implications for theory and policy that follow

ERP systems introduction and internal auditing legitimacy: An institutional analysis

In this paper, the authors examine how the internal audit function (IAF) maintains its legitimacy when enterprise resource planning (ERP) systems are introduced. This work centers on an in-depth case study of a multinational bank and finds that ERP systems impose an institutional logic of control based on interlinked assumptions. These assumptions motivate changes in the practice and structure of the IAF to become an integrated and comprehensive function to maintain its legitimacy