International Journal of Finance, Insurance and Risk Management ISSN: 2017-0916

An Analysis of the Board of Directors Composition: The Case of Maltese Listed Companies

Peter J. Baldacchino, Norbert Tabone, Janice Camilleri, Simon Grima
International Journal of Finance, Insurance and Risk Management, Volume 10, Issue 1, 25-44, 2020
DOI: 10.35808/ijfirm/205

Abstract:

Purpose: The objectives of this study were to analyse certain aspects of the Board composition of Maltese listed companies (MLCs), namely Board size, independence, expertise, gender diversity and the chairperson/CEO links, and how these may be improved. Design/Approach/Methodology: The study was designed around a qualitative approach of data collection. Semi-structured interviews were conducted with seventeen participants, consisting of fourteen company secretaries of MLCs, a representative of the Maltese regulator, a corporate advisor and a corporate lawyer. Findings: The nomination and appointment process of directors in MLCs relies mainly on networking, with a tendency to continuously appoint the same tried network of directors. This creates a barrier towards new talent being introduced into boardrooms. A general disagreement also persists as to what constitutes a truly independent Board member. Practical Implications: Practical experience often supplants academic qualifications when nominating and appointing directors. Moreover, female representation on the Boards of MLCs is still lacking. Notwithstanding the fact that the importance of having separate chairperson/CEO roles is acknowledged, there is likely to be strong resistance to any law rendering this mandatory. Originality/Value: Studies relating to the composition of the Board of Directors in smaller states such as the island state of Malta are infrequent. This paper provides information that is of particular value to listed companies in smaller states and their stakeholders, including regulators and sheds more light on the priniciple of proportionailty when dealing with requirements imposed by the authorities.


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