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The Cadbury code reforms and corporate performance.

McKnight, Phillip J.; Milonas, Nikolaos T.; Travlos, Nickolaos G.; Weir, Charlie

Authors

Phillip J. McKnight

Nikolaos T. Milonas

Nickolaos G. Travlos

Charlie Weir



Abstract

This paper investigates the impact of adopting the Cadbury Committee's Code of Best Practices on the corporate performance of UK firms. The findings show improved corporate performance by companies which adopted the Code. Regarding the specific recommendations of the Code, splitting the positions of the Chairman of the Board and CEO does not result in improved corporate performance. The establishment of an internal audit and/or remuneration committee is positively associated with corporate performance, while the presence of a key executive director in such committees is negatively associated with corporate performance. There is a negative relation between corporate performance and the proportion of non-executive directors, but a positive relation between corporate performance and the square of the proportion of non-executive directors.

Journal Article Type Article
Publication Date Jan 1, 2009
Journal IUP journal of corporate governance
Print ISSN 0972-6853
Publisher IUP Publications
Peer Reviewed Peer Reviewed
Volume January 2009
Article Number IJCG20901
Institution Citation MCKNIGHT, P.J., MILONAS, N.T., TRAVLOS, N.G. and WEIR, C. 2009. The Cadbury code reforms and corporate performance. IUP journal of corporate governance [online], January 2009, article ID IJCG20901. Available from: http://www.iupindia.in/...ode_Reforms_22.html2009
Keywords Cadbury code reforms and corporate performance; Internal audit; Remuneration committee; Nonexecutive directors; Listed companies; Board structures and functions; Comply or explain; Internal governance mechanisms; Chief Executive Officer (CEO); Panel data;
Publisher URL http://www.iupindia.in/109/IJCG_Cadbury_Code_Reforms_22.html

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