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DETERMINANTS OF NOMINATION COMMITTEE: NEW ZEALAND EVIDENCE

Md. Borhan Uddin Bhuiyan, Ahsan Habib

DOI: 10.22495/cbv7i2c1art5

Abstract

A sizable volume of corporate governance literature documents that an independent and competent board of directors matter for organizational success. In order to function effectively, board comprises of different sub-committees and the three most common sub-committees are audit committees, compensation committees and nomination committees. Surprisingly, there is a paucity of research in understanding the determinants of nomination committee notwithstanding the importance of an independent nomination committee in board selection process. We contribute to the nomination committee literature by investigating the factors associated with the determination of nomination committees in New Zealand. We find that cross-sectional variation in the firm-specific characteristics affect the existence of nomination committees. This finding casts doubt on the „one-size-fits all‟ approach of corporate governance. Our logistic regression of the nomination committee determinants indicates that firm size, governance regulation and busy directors are positively associated with the existence of nomination committees, whereas firm leverage, controlling shareholders, and director independence are negatively related to the formation of nomination committees.

Keywords: Corporate Governance Best Practice Code, Nomination Committee, Board Busyness, Controlled Ownership, New Zealand

How to cite this paper: Bhuiyan, Md. B. U., & Habib, A. (2011). Determinants of nomination committee: New Zealand evidence. Corporate Board: role, duties and composition, 7(2-1), 54-63. doi:10.22495/cbv7i2c1art5

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