Is Board Composition Important? A Study of Listed Australian Companies

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Abstract
This paper examines the impact of board composition on corporate performance and executive remuneration in large Australian companies. In particular, we focus on the proportion of independent directors on the board. Whether corporate performance is assessed using accounting or share-price measures, our studies produce no consistent evidence that independent directors either add or destroy value. Similarly, the studies show no link between the proportion of independent directors on the board and the level or manner of remuneration of the CEO. We conclude that any benefits flowing from the introduction of prescriptive corporate governance requirements may well be outweighed by the compliance costs.