Major determinants of effectiveness in the composition of public sector boards of directors : a Maltese viewpoint

Abstract

As is the case with all listed entities, good corporate governance (CG) practices within public sector entities (PSEs) are essential for such entities to attain long-term growth (Kaufmann et al., 2005). In this connection, Matei and Drumasu (201 5) also emphasize the significance of such practices in PSEs for achieving success and thus preventing considerable losses being unfairly borne by the taxpayers. The purpose of this article is to discuss one important aspect of these practices, that is, the effective composition of PSE Boards of Directors ("Boards"). It overviews some of the Board diversity major determinants of such composition effectiveness based mostly on recent research studies in which the author has been involved relating both to those entities listed on the Maltese Stock Exchange (MLEs) and to Maltese PSEs (MPS£s). The latter consist of entities which are directly or indirectly controlled by the Maltese government, and which are established under the Companies Act (Cap. 386 of the Laws of Malta). The determinants to be included are Board diversity, Board independence and mix, Board size and the links between the Chairperson and the Chief Executive Officer (CEO). [excerpt]