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We should be wary of overstating the effect of these changes. We need to remind ourselves that these rules are model default articles not mandatory rules. Many companies, particularly larger companies have altered their articles from the Table A form to take account of the evolving function of the board and the needs of the particular company. Vodafone Plc’s articles, for example, provide for delegation to any ‘manager of the company’ (article 115.2 www.vodafone.com/ ); however, its articles continue to require that ‘the company’s business will be managed by the directors’ (emphasis added) (article 114.1).
See, for example, Kirchmaier arguing that ‘it is often rare to find people with a background in banking or financial services on boards of banks; it is not uncommon that the only non-executive directors with banking experience are former executives of that bank’: T. Kirchmaier, ‘Inject Governance, and Not Just Cash: Some Thoughts on the Governance o f Banks’ (27 October 2008), available at SSRN: http://papers.ssrn.com/.
Report of the Committee on the Financial Aspects of Corporate Governance 1992, available at www.ecgi.org/.
Available at www.ecgi.org/.
Available at www.berr.gov.uk/.
See ORC for this report. Following the banking crisis of 2007–2009, in March 2009 the FRC announced a review of the Code. The consultation period in this regard will end in 2009.
For empirical evidence documenting high and increasing compliance levels see S. Arcot and V. Bruno, ‘In Letter but Not Spirit: An Analysis of Corporate Governance in the UK’ at http://papers.ssrn.com/; and I. McNeil, ‘Comply or Explain: Market Discipline and Non-Compliance with the Combined Code’ (2006) Corporate Governance: An International Review 486.
See ORC for a report on the statistics produced in this regard by the Corporate Library.
As of 2005 95% of S&P 500 boards had a lead or presiding director (Spencer Stuart, A Closer Look at Lead and Presiding Directors—see ORC for further information).
A correlation in statistics is a relationship between variables: one variable moves in response to the change of another variable. A useful basic definition is as follows: ‘degree of relationship between two sets of information. If one set of data increases at the same time as the other, the relationship is said to be positive or direct. If one set of data increases as the other decreases, the relationship is negative or inverse’ The Free Dictionary, http://encyclopedia.farlex.com/.
See S. Arcot and V. Bruno, One Size Does not Fit All, After All: Evidence from Corporate Governance (Working Paper: See ORC for link to this): ‘Our analysis provides support for the principle that in corporate governance regulation one-size-does-not-fit-all. We find that companies that depart from best practice because of genuine circumstances outperform all others. On the contrary, mere adherence to general accepted principles of good corporate governance is not necessarily associated with superior performance.’