Exploring the governance committee: the trinity’s great forgotten

• DOI: https://doi.org/10.1108/CG-01-2018-0039
• Pages: 339-352
• Date: 31 October 2018
• Published date: 31 October 2018
• Author: Jean-François Henri,Sylvie Héroux
• Subject Matter: Corporate governance,Strategy

Exploring the governance committee: the

trinity’s great forgotten

Jean-François Henri and Sylvie Héroux

Abstract

Purpose –This paper aims to exploregovernance committee’s attributes in terms of composition,roles/

dutiesand responsibilities and operations.

Design/methodology/approach –Information on the governancecommittee and the board in general

was collected from the websites of 167 Canadian firms. Financial data were collected from the Sedar

database.

Findings –Results uncover two patterns of governance committee attributes (compos ition, roles

and operations), resulting in our characterization o f governance committees as ‘‘less active’’ and

‘‘more active.’’ In light of additional analyses, the two groups a lso differ in terms of antecedents and

impact.

Practical implications –This study can help board members to enhance board effectiveness by

describing governancecommittee attributes and identifyingcontextual factors that could lead to a more

active governance committee. In addition, it suggests that such committee can improve financial

performance.

Originality/value –This empiricalresearch focuses on the governance committee, a largelyunexplored

primary boardoversight committee. An index comprising19 duties and responsibilitiesperformed by the

governancecommittee was developed.

Keywords Board of directors effectiveness, Governancecommittee

Paper type Research paper

1. Introduction

A Canadian financial market regulator, the Autorite

´des marche

´s financiers (AMF) (2016;

initial publication in 2009), hasestablished governance guidelines that set out the roles and

responsibilities of board members and board committees, especially the audit committee.

Although applicable to financial institutions, this guideline suggests good governance

practices that may be relevant to any typeof business.

In addition to the audit committee, which is mandatory for listed firms’ board of directors,

two other committees appear to be recognizedas key pillars of good governance practices:

1. the human resources and compensation committee, which is in charge of nominating

and compensating executive management and evaluating CEO performance; and

2. the governance committee[1], whose main tasks are to develop the mandates of the

board and its committees, recruit new board members, establish board remuneration,

evaluate board effectiveness and monitor governance [Canadian Coalition for Good

Governance (CCGG), 2013;CPA Canada, 2010;E

´cole Nationale d’Administration

Publique (ENAP), 2007; Leblanc,2007, 2013;Organisation for Economic Co-Operation

and Development (OECD), 2004].

Both the audit committee and the human resources committee have been abundantly

examined (for the audit committee, see Beasley et al.,2009;Chen and Jian, 2007;DeZoort

Jean-Franc¸ois Henri is

Professor at E

´cole de

comptabilite

´, Universite

´

Laval, Quebec City,

Canada. Sylvie He

´roux is

Professor at the

Department of Accounting,

Universite

´du Que

´bec a

`

Montre

´al, Montreal,

Canada.

Received 22 January 2018

Revised 23 May 2018

25 September 2018

Accepted 28 September 2018

The authors acknowledge the

financial support of the

Corporate Reporting Chair of

ESG-UQAM. We also thank

Genevie

`ve Girard for her help

as a research assistant.

DOI 10.1108/CG-01-2018-0039 VOL. 19 NO. 2 2019, pp. 339-352, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 339