The remuneration of independent directors in the UK and Italy: An empirical analysis based on agency theory

This study investigates independent non-executive directors’ remuneration from an agency theory perspective, taking into account both optimal contracting and managerial power perspectives. Using a sample of 1733 independent non-executive directors’ year observations in Italian and UK non-financial firms listed in the period 2007–2009, we find that in both countries independent non-executive directors’ remuneration is mainly based on the observable effort they exert and their responsibilities. Our findings also show that independent non-executive directors who do not fulfil formal independence criteria, as stated in the respective national corporate governance codes, seem to be paid more than those who do fulfil such criteria, particularly in the UK. Our findings contribute to the existing literature by providing evidence on the determinants of independent non-executive directors’ remuneration in two major European economies and offer insights to policy-makers by questioning the effectiveness of adopting non-binding criteria when assessing non-executive directors’ independence

Corporate Governance in Islamic Banks: New Insights for Dual Board Structure and Agency Relationships

We investigate the influence of the dual board structure on the financial performance of Islamic banks. The paper also investigates the unique agency relationships using a sample of 90 Islamic banks across 13 countries over the period 2006-2014. We find that the larger the Shari’ah Supervisory Board (SSB) the better the financial performance and this result reinforces the fundamental role of the SSB to certify permissible financial instruments and products. We also find evidence of the scope of operation hypothesis with respect to both the board of directors and the SSB as Islamic banks are characterised by a higher degree of complex operations. Interestingly, we find that a larger SSB size may result in lower agency costs and that the greater the size of the unrestricted contracts, the higher the agency costs. This implies that unrestricted profit-sharing contracts are one of the main sources of the unique agency relationships in Islamic banks. The paper has a number of policy implications for regulators including the design of governance mechanisms in Islamic banks and the dynamics of unrestricted contracts

Functional fixation: an investigation of the influence of earnings per share on company financing decisions

In this thesis the various arguments that have been put forward for the determinants of a company's capital structure are examined critically. However, none of these succeeds convincingly in reflecting actual practice. Furthermore, it is argued that the common practice of concentrating on Earnings Per Share (EPS) as a key indicator of a company's performance also impacts on the capital issue choice, and that there is functional fixation on EPS, particularly short-term EPS. Therefore the effect on a company's EPS of a particular method of finance turns out to be an important influence on a company's financing decisions. A questionnaire sent to finance directors of companies elicits their views on their perceptions of the important influences on the choice of financing, and the responses are analysed using multivariate techniques. The results are encouraging as far as the present research question is concerned. An innovative approach of reconstructing company's financial statements to investigate the impact on various financial data if an alternative financing method had been chosen provides further evidence of a fixation on EPS. Limited dependent variable analysis is carried out to determine the variables which appear to influence the debtequity choice. A by-product of the research question is an analysis of 'elasticity' measures of gearing, i. e. degrees of financial and operating leverage; and the usefulness and consistency of the bases of measurement used for these. This thesis seeks to determine the extent to which financial choice is explained by, or at least consistent with, the maximisation of Earnings Per Share. In so doing, it seeks to provide a vital link between finance research and related financial accounting issues

Lessons from the UK

In 1992 the Cadbury Committee report on the financial aspects of corporate governance was published. The Committee had been established following the failures of a number of high profile businesses in the UK which had shaken confidence in the market. Some nine years later, in 2001, the collapse of Enron sent shockwaves through the US market. As a result of the Enron collapse and various other high profile scandals in the years since its occurrence, the US is examining its own corporate governance structures and provisions to determine how these might be improved and help avoid another Enron. The EU similarly is developing principles and legislation to improve corporate governance, and scandals such as Royal Ahold and Parmalat have helped drive further governance reforms. In this paper we detail the development of corporate governance codes in the UK and the adaptation of similar codes in the EU. We discuss the role of the financial sector in corporate governance and how principles for regulation and supervision of the financial sector complement codes of conduct and legislation in the area of corporate governance. JEL Classification numbers: G34, G28, G22, G23 Keywords: corporate governance, financial sector; institutional investors

International consensus conference recommendations on ultrasound education for undergraduate medical students

Objectives: The purpose of this study is to provide expert consensus recommendations to establish a global ultrasound curriculum for undergraduate medical students. Methods: 64 multi-disciplinary ultrasound experts from 16 countries, 50 multi-disciplinary ultrasound consultants, and 21 medical students and residents contributed to these recommendations. A modified Delphi consensus method was used that included a systematic literature search, evaluation of the quality of literature by the GRADE system, and the RAND appropriateness method for panel judgment and consensus decisions. The process included four in-person international discussion sessions and two rounds of online voting. Results: A total of 332 consensus conference statements in four curricular domains were considered: (1) curricular scope (4 statements), (2) curricular rationale (10 statements), (3) curricular characteristics (14 statements), and (4) curricular content (304 statements). Of these 332 statements, 145 were recommended, 126 were strongly recommended, and 61 were not recommended. Important aspects of an undergraduate ultrasound curriculum identified include curricular integration across the basic and clinical sciences and a competency and entrustable professional activity-based model. The curriculum should form the foundation of a life-long continuum of ultrasound education that prepares students for advanced training and patient care. In addition, the curriculum should complement and support the medical school curriculum as a whole with enhanced understanding of anatomy, physiology, pathophysiological processes and clinical practice without displacing other important undergraduate learning. The content of the curriculum should be appropriate for the medical student level of training, evidence and expert opinion based, and include ongoing collaborative research and development to ensure optimum educational value and patient care. Conclusions: The international consensus conference has provided the first comprehensive document of recommendations for a basic ultrasound curriculum. The document reflects the opinion of a diverse and representative group of international expert ultrasound practitioners, educators, and learners. These recommendations can standardize undergraduate medical student ultrasound education while serving as a basis for additional research in medical education and the application of ultrasound in clinical practice

The role of atmospheric deposition in the biogeochemistry of the Mediterranean Sea

Estimates of atmospheric inputs to the Mediterranean (MED) and some coastal areas are reviewed, and uncertainities in these estimates considered. Both the magnitude and the mineralogical composition of atmospheric dust inputs indicate that eolian deposition is an important (50%) or prevailing (>80%) contribution to sediments in the offshore waters of the entire Mediterranean (MED) basin. Model data for trace metals and nutrients indicate that the atmosphere delivers more than half the lead and nitrogen, one-third of total phosphorus, and 10% of the zinc entering the entire basin. Measured data in sub-basins, such as the north-western MED and northern Adriatic indicate an even greater proportion of atmospheric versus riverine inputs. When dissolved fluxes are compared (the form most likely to impinge on surface water biogeochemical cycles), the atmosphere is found to be 5 to 50 times more important than rivers for dissolved Zn and 15 to 30 times more important for Pb fluxes. Neglecting co-limitation by other nutrients, new production supported by atmospheric nitrogen deposition ranges from 2-4 g C m-2 yr-1, whereas atmospheric phosphorus deposition appears to support less than 1 g C m-2 yr-1. In spite of the apparently small contribution of atmospheric deposition to overall production in the basin it has been suggested that certain episodes of phytoplankton blooms are triggered by atmospheric deposition of N, P or Fe. Future studies are needed to clarify the extent and causal links between these episodic blooms and atmospheric/oceanographic forcing functions. A scientific program aimed at elucidating the possible biogeochemical effects of Saharan outbreaks in the MED through direct sampling of the ocean and atmosphere before and after such events is therefore highly recommended

Institutional Investors and Voting Practices: an international comparison

The potential influence of groups of large shareholders was identified in the 1930s when Berle and Means (1932) highlighted the impact of the separation of ownership and control in corporations. Over sixty years later, institutional investors own large portions of equity in many companies across the world, and play a key role in the corporate governance arena. Corporate governance is defined in the Cadbury Report (1992) as “the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place”. In order to help satisfy this role, institutional shareholders engage in regular dialogue with companies; they also have the right to vote at companies’ annual general meetings. However evidence (Mallin 1995, 1996; PIRC 1998, 1999) shows that there is a much lower level of voting by institutional investors in the UK than might be expected. In the UK, the existing proxy voting system is generally viewed as slow and overly-complicated with many players in the chain and with little flexibility. By comparison, the US has, for a number of years, had in place state and federal legislation to allow proxy votes to be cast using modern media. Corporations have changed their articles as appropriate to take advantage of these revisions, and to enable them to be enacted in their own corporations. Legislation making similar provisions was also enacted in Australia in 1998. Increasingly it is seen as desirable, and eminently sensible, for the UK to follow suit (NAPF Inquiry, 1999). This paper discusses the concept of the vote being a “fiduciary duty”, and compares the voting systems in several countries, including the UK, US, Australia, and Germany. The emerging trends in the area are discussed and the development of voting in the next millennium explored

Developments in Corporate Governance in Central and Eastern Europe

The countries of western Europe have seen far reaching corporate governance developments in recent years, ranging from the Cadbury Report in the UK to the Vienot Report in France. These developments have been discussed in toto in the report of the CEPS working party on corporate governance in Europe. However alongside the developments in western Europe, there are fundamental political and economic changes going on in the countries in Eastern and Central Europe (CEEC) which have significant implications for the development of corporate governance in these countries. In this paper we analyse the changes that have taken place in a number of CEEC countries, highlighting both the commonalities and the differences, and the way that these countries are developing in terms of their corporate governance structures. The demise of central planning, for example, has led to a shift of control, and we seek to examine such issues as where control now lies, the effects of privatisation, and the problems of development of institutional arrangements for corporate governance. Financial institutions have a key role to play in the changes in the CEEC and therefore the latter part of the paper places a special emphasis on the role of financial institutions, particularly banks, as monitors in the CEEC, and analyses the banks’ role in firms’ restructuring. The implications for the role of banks in any developing corporate governance system are immense, with banks playing a central role as monitors of corporate success. However the privatisation of banks and firms is not, per se, sufficient to ensure that these enterprises develop adequate corporate governance structures which are able to cope with problems endemic in the current framework, and are capable of evolving to take account of future changes. We examine the existing structures in several CEEC, and provide a taxonomy of changes that have occurred to date. We discuss likely future changes and conclude on the likely effects on corporate governance in the CEEC