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    The independent director on the board of company directors

    Access Status
    Fulltext not available
    Authors
    McCabe, Margaret
    Nowak, Margaret
    Date
    2008
    Type
    Journal Article
    
    Metadata
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    Citation
    McCabe, Margaret and Nowak, Margaret. 2008. The independent director on the board of company directors. Managerial Auditing Journal. 23 (6): pp. 545-566.
    Source Title
    Managerial Auditing Journal
    DOI
    10.1108/02686900810882101
    ISSN
    02686902
    School
    Graduate School of Business
    URI
    http://hdl.handle.net/20.500.11937/18035
    Collection
    • Curtin Research Publications
    Abstract

    Purpose – The purpose of this paper is to examine the views of directors of public-listed Australian companies regarding the role of the independent director and the significance of that role in relationship to the composition of the board of company directors. Design/methodology/approach – A qualitative study using a grounded research approach was used and 30 directors of Australian public-listed companies were interviewed. Findings – The analysis indicates that participating directors were convinced that a majority of non-executive directors (NEDs) provided a safeguard for a balance of power in the board/management relationship. The difference between NEDs, who are also independent directors, and NEDs who are not independent, was highlighted as an important distinction. The capacity for board members to think independently was seen to be enhanced, but not necessarily ensured, with majority membership of NEDs. However, a majority of independent minds expressing multiple points of view was perceived to reduce the board room hazard of “group think.”Research limitations/implications – The study was conducted within the context of the preferred model for board composition in Australian public-listed companies which requires a majority of NEDs. Originality/value – Conflicting evidence surrounding the claim that a majority of independent members in the board structure contributes to “best pratice governance” makes the paper relevant to governance issues being debated in the global arena.

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