Companies suffering 'reform indigestion'

PETER RODGERS

Business Editor

The boardroom reforms from the Cadbury Committee on corporate governance have had no positive effect on financial performance, according to the vast majority of respondents to a CBI and Touche Ross survey of chairmen and chief executives. This was the view of 90 per cent of those surveyed.

The survey also found that most companies - 85 per cent - want further reforms to corporate governance to be put on hold for two years while the results of the Cadbury and Greenbury committees are digested.

The results back the CBI's view that companies are suffering corporate governance indigestion and do not want any further big changes until there is more experience of how the existing requirements work. Nearly half the respondents - 42 per cent - singled out particular sections of the Cadbury code as needing to be changed.

And more than half - 54 per cent - felt that only larger listed companies should be required to comply with all the code, with a stronger majority of 67 per cent believing it should be modified for smaller listed companies.

Sir Bryan Nicholson, CBI president, said in a foreword to the survey report: "We must be careful that the wider purpose does not get lost in the detail of self-regulation and that necessary checks and balances against abuse do not undermine the cohesion and entrepreneurial drive of the board in its task of developing the business."

Martin Scicluna, chairman of Touche Ross, said: "UK plc would like a year or two to collect and examine the evidence as to whether more change is necessary."

He said he was glad that Sir Ronald Hampel, chairman of ICI and of the successor committee to the Cadbury committee on corporate governance, had taken full account of this need to develop experience before considering further change.