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CORPORATE GOVERNANCE
Blackwell Publishing LtdOxford, UK
CORGCorporate Governance: An International
Review0964-8410© 2007 The Authors; Journal
compilation © 2007 Blackwell Publishing Ltd
March 2007152194207ORIGINAL ARTICLES
CORPORATE GOVERNANCE AND BOARD COMPOSITION
COPRORATE GOVERNANCE
Corporate Governance and Board
Composition: diversity and
independence of Australian boards
Helen Kang*, Mandy Cheng and Sidney J. Gray
The board of directors is one of a number of internal governance mechanisms that are intended
to ensure that the interests of shareholders and managers are closely aligned, and to discipline
or remove ineffective management teams. Among the most significant governance issues
currently faced by the modern corporation are those relating to diversity, such as gender and
age, and independence of directors.
While board diversity and independence has been a growing area of research in recent years,
most empirical research on this topic has been restricted to US data. The generalisability of
such findings may not extend across national boundaries due to different regulatory and
economic environments, cultural differences, the size of capital markets and the effectiveness
of governance mechanisms. Consequently, the importance and value of various governance
structures, including board diversity and independence, should be separately examined in
each country, and the influential factors investigated.
This study reports on the diversity and independence of the board membership of 100 top
Australian companies in 2003. Australia has one of the most developed stock markets in the
Asia-Pacific region. With the collapse of several well-known public companies such as Ansett,
OneTel and HIH, there is an increasing demand to evaluate the corporate governance practices
of Australian companies, including the composition of boards. Accordingly, this research
provides a timely review of the state of corporate governance in Australia...