The Determinants of Non-Executive Representation on the Boards of Large UK Companies

An important aspect of current governance practice is theutilisation of non-executive directors to monitor the behaviourof senior management. The purpose of this paper is to provide aninitial insight on the determinants of non-executiverepresentation on the boards of large UK companies. The studyadopts an agency theory perspective, focusing specifically on theimpact of company size and ownership on non-executiverepresentation. I find that larger companies, where monitoringvia ownership is expected to be less efficient, utilise higherlevels of non-executive representation. I also find thatnon-executive representation is positively associated with theownership of external blockholders. The presence of CEO/chairmanduality has a negative impact on non-executive representation. Overall, the findings suggest that companies utilise boards withstronger monitoring potential when size and ownershipcharacteristics suggest that alternative governance mechanismsmay be unable to ensure managers pursue shareholders' interests.