Board structure of New Zealand listed companies : an international comparative study

Abstract

Remarkably little is known about the boards of directors of New Zealand companies. The most recent research in this area was conducted by Turner (1985) who examined CEO duality among listed companies for 1984, and Chandler and Henshall (1982) who examined board size, incidence of executive chairmanship and the proportion of outsiders on the boards of listed companies. In section two of this paper, I seek to expand on these earlier studies and, in particular, identity what changes in board structure have subsequently occurred. This analysis should give us a sense of the responsiveness of New Zealand companies to pressures to reform corporate governance and the current state of corporate governance with respect to board structure characteristics. In the terminology of Boyd, Carroll, and Howard (1996), this analysis is micro and descriptive in nature. Micro, because I examine board variables, and descriptive because I am focusing on a single country, New Zealand. The approach taken in section two of this paper is not dissimilar to much previous corporate governance research. As Boyd et al. state, "much prior work has taken a descriptive rather than a comparative or explanatory focus" (1996, p.16). In fact international comparative research on board structure is a neglected area, with Boyd et al. (1996) commenting that: " ... international research on corporate governance appears surprisingly scarce" (p.3); and " ... much remains to be done to understand the function and effectiveness of international boards, and to provide comparisons across nations" (p.16). That international corporate governance research is so scarce it is somewhat surprising, especially when several studies indicate that there are in fact marked differences in board structure between some countries (Dalton, Kesner, and Rechner, 1988; Dalton and Kesner, 1987). As Daily and Dalton (1994) demonstrate, these differences in board structure may have important implications for the performance and, ultimately, the very survival of corporations. Section three this paper examines previous international studies of board structure, making comparisons with the available New Zealand data. Section four of this paper contains a discussion and conclusions.