Non‐executive directors and the Higgs consultation paper, ‘Review of the role and effectiveness of non‐executive directors’
| DOI | https://doi.org/10.1108/13581980210810346 |
| Published date | 01 December 2002 |
| Pages | 361-371 |
| Date | 01 December 2002 |
| Author | Kevin Keasey,Robert Hudson |
| Subject Matter | Accounting & finance |
Non-executive directors and the Higgs
consultation paper, ‘Review of the role and
effectiveness of non-executive directors’
Kevin Keasey and Robert Hudson
Received: 11th July, 2002
International Institute of Banking and Financial Services, Leeds University Business School, The
University of Leeds, Leeds, West Yorkshire, LS2 9JT, UK; tel: +44 (0)113 233 2618; fax: +44 (0)113
233 2640; e-mail: kk@lubs.leeds.ac.uk
Kevin Keasey is Professor of Financial
Services and Director of the International
Institute of Banking and Financial Services
at the University of Leeds.
Robert Hudson is a lecturer at Leeds Uni-
versity Business School. He has extensive
business experience and is a Fellow of the
Institute of Actuaries and a Chartered
Mathematician. He specialises in the
financial services industry and is the
author of a book on stock market invest-
ment and a number of refereed articles in
leading international journals.
ABSTRACT
This paper has the objective of reflecting on the
role of non-executive directors (NEDs) in the
corporate governance process. The paper reviews
the role of NEDs both from an academic perspec-
tive and from the perspective of the lead author’s
practical experience of being (having been) a
chairman, a chief executive and a NED on the
boards of private and public companies. In addi-
tion to taking an overview of the main issues
involved the paper comments on the specific
issues raised in the Department of Trade and
Industry (DTI) review of the role and effective-
ness on NEDs by Derek Higgs.
1
Finally, the
paper offers conclusions and recommendations for
improving the effectiveness of NEDs.
INTRODUCTION
This paper has the simple objective of
reflecting on the role of non-executive
directors (NEDs) in the corporate govern-
ance process. Given the increasing number
of financial scandals in the USA (Enron,
Tyco, Global Crossing, WorldCom,
Xerox, etc.) and the continuing worry in
the UK over executive pay, it seems timely
to consider what should really be expected
of NEDs — and if Lord Young of Graff-
ham is to be believed, it is not a lot.
Reflecting on NEDs is also timely because
of the Department of Trade and Industry
(DTI) review of the role and effectiveness
on NEDs by Derek Higgs (2002).
2
The approach adopted here is not usual
for an academic paper in that it does not
use a rigorous theoretical framework,
extensive field work or in-depth case stu-
dies; instead, it offers reflections on the sub-
ject based on the authors’ extensive
academic research on the topic of corporate
governance
3,4
and the lead author’s practi-
cal experience of being (having been) a
chairman, a chief executive and a NED on
the boards of private and public companies.
The paper is intended, therefore, to be a
blend of academic insight and practical
experience.
The structure of the paper is also simple
Page 361
Journal of Financial Regulation and Compliance Volume 10 Number 4
Journal of Financial Regulation
and Compliance, Vol. 10, No. 4,
2002, pp. 361–371
#Henry Stewart Publications,
1358–1988
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