Corporate governance in the UK post-Cadbury
This thesis examines the corporate governance structures of UK companies following the publication of the Cadbury Committee's Report on the financial aspects of corporate governance in 1992. New evidence is provided on the role of managerial control, board structure and equity issuance in company decision making with respect to the adoption of a corporate governance code of best practice, CEO replacement and appointment decisions, and corporate restructuring. These findings shed new light on the interaction of corporate governance systems, the factors that drive changes in these structures, and the role of corporate governance in discrete corporate tasks. Initially the factors affecting company's decisions on whether to comply with the report's recommendations on non-executive director representation and separating the roles of the Chief Executive and the Chairman of the Board are examined. This study then examines the role of governance structures in three separate discrete tasks ; (i) the likelihood of forced top executive turnover and the origin of the replacement CEO, (ii) the role of governance structures in CEO selection, based on the performance consequences of top management change, and (iii) the relationship between governance and firm responses to a large decline in operating performance. The evidence presented in this thesis contributes to the growing research on board structure and capital market discipline. Specifically, changes in board structure were driven largely by changes in managerial control and equity issuance, which has implications for the likelihood and the potential effects of the global move towards corporate boards that are dominated by outside directors. Furthermore, new evidence is provided on the various tasks in which different corporate governance structures play an important economic role. Capital markets are involved in various types of company decisions whereas board structure is found to play a role only in CEO decisions.