This study investigates the relationships between different phenomena within
Commercial Semi-State organisations in Ireland. It is concerned with
establishing whether the financial performance of these organisations is
impacted by the composition of its board of directors, the independence of
non-executive directors and the introduction of worker-directors.
The research examines the current state of play for best practice corporate
governance within both the public and private sectors and in both Ireland and
the UK - where most of the guidelines appear to have their origin. It then
proceeds with a discussion of how best practice of corporate governance might
impact the specific business arena being investigated -i.e. commercial semistate
organisations. It concludes that the most important of these are: board
composition, independence of non-executive directors, functionality of the
audit committee and finally the remuneration committee.
The methodology suggested as best fulfilling the requirements of the study are
inductive research and a multi-method strategy for primary data gathering. The
initial source of data is the company Annual Reports for the most recent
financial year followed up with individually customised questionnaires which
are designed to complete any gaps in the information required. A fundamental issue surrounding the interpretation of the requirements to fulfil the role of an independent non-executive director arises during the research which also leads to investigation into the role and status of the elected Worker-Director within a group of 6 of the represented organisations. Conflict emerges between the interpretation placed by the organisations on the criteria for independence of non-executive directors and the researcher's interpretation of the current best practice. The study concludes that there is a difficulty with the composition of the board of directors of these organisations both in terms of balance between executive and non-executive and also with the balance of power and apparent lack of independence. The study also concludes that whilst there are only tenuous links between best practice corporate governance and financial performance, the most important dynamic for the organisation to focus on is the board of directors. The relationships, status and power of those directors are the most important area within which the operation of good governance is at a premium.