Board attributes that increase firm risk - evidence from the UK

Purpose – The aim of the paper is to identify the board attributes that significantly increase firm risk. The study aims to find if board size, percentage of non-executive directors, women on the board, a powerful CEO, equity ownership amongst executive board directors and institutional investor ownership, are associated with firm risk. This is the first study that examines which board attributes increase firm risk using a UK based sample. Design/methodology/approach – This empirical study collected secondary data from Bloomberg and Morningstar databases. The data sample is an unbalanced panel of 260 companies’ secondary data on FTSE 350 index in the UK, from 2005 to 2010. The data was statistically analysed using STATA. Findings – The study establishes the board attributes that were significantly related to firm risk. The results show that a board which can increase firm risk is one that is small in size,has high equity ownership amongst executive board directors and has high institutional investor ownership. Research limitations/implications – The governance culture and regulatory system in the UK is different from other countries. Since the data is a UK based sample, the results can lack generalisability. Practical implications – The results are useful for investors who invest in large firms, to have the knowledge about the board attributes that can increase firm risk. Regulators can also use the results to strengthen regulatory guidelines. Originality/value – This study fills the gap in knowledge in UK governance literature on the board attributes that can increase firm risk.

An empirical study of the variability in the composition of British freight trains

As part of the broader sustainability and economic efficiency agenda, European transport policy places considerable emphasis on improving rail’s competitiveness to increase its share of the freight market. Much attention is devoted to infrastructure characteristics which determine the number of freight trains which can operate and influence the operating characteristics of these trains. However, little attention has been devoted to the composition of the freight trains themselves, with scant published data relating to the practicalities of this important component of system utilisation and its impacts on rail freight viability and sustainability. This paper develops a better understanding of the extent to which freight train composition varies, through a large-scale empirical study of the composition of British freight trains. The investigation is based on a survey of almost 3,000 individual freight trains, with analysis at four levels of disaggregation, from the commodity groupings used in official statistics down to individual services. This provides considerable insight into rail freight operations with particular relevance to the efficiency of utilisation of trains using the available network paths. The results demonstrate the limitations of generalising about freight train formations since, within certain commodity groupings, considerable variability was identified even at fairly high levels of disaggregation.