Definition: Cadbury Report
The Cadbury Report is a seminal report on the financial aspects of corporate governance in the United Kingdom, published in 1992. The report was prepared by a committee chaired by Sir Adrian Cadbury (1929-2015). The report emphasized the importance of implementing best practices in corporate governance to enhance the accountability and efficacy of company boards. Key recommendations included the structured appointment of non-executive directors for specified terms, ensuring that their reappointment was not automatic, and mandating a formal process for their selection.
Examples
-
Non-Executive Director Appointment: A company ensuring that the appointment of non-executive directors is carried out through a transparent and formal process rather than relying on internal recommendations without verification.
-
Corporate Governance Improvement: A company revising its corporate governance framework, incorporating recommendations from the Cadbury Report to align with modern governance standards and enhancing board accountability.
Frequently Asked Questions
Q: What is the main objective of the Cadbury Report?
A: The main objective of the Cadbury Report is to establish a framework for corporate governance to ensure that company boards are effective, accountable, and that financial reporting is transparent.
Q: How did the Cadbury Report influence the UK Corporate Governance Code?
A: The Cadbury Report’s principles were foundational in shaping the UK Corporate Governance Code first issued in 1998. Subsequent reports such as the Greenbury Report and the Hampel Report further refined these principles.
Q: Who was the chairperson of the committee that produced the Cadbury Report?
A: The Cadbury Report was chaired by Sir Adrian Cadbury.
Q: What specific governance aspects did the Cadbury Report address?
A: The report focused on the roles of non-executive directors, their appointment terms, selection process, and the overall accountability and transparency of company boards.
Q: Are the recommendations in the Cadbury Report legally binding?
A: The recommendations are not legally binding but serve as a code of best practices that companies are encouraged to follow.
Related Terms
Greenbury Report: A report focusing on executive remuneration, issued in 1995. It aimed to curb excessive executive pay and enhance transparency.
Hampel Report: Issued in 1998, it further reinforced and expanded on the principles of good corporate governance established by the Cadbury and Greenbury Reports.
Corporate Governance Code: A set of principles of good corporate governance practices for companies listed on the UK’s stock exchange, derived from reports like Cadbury, Greenbury, and Hampel.
Non-Executive Directors: Board members without executive responsibilities in the company. They provide independent oversight and contribute to corporate governance practices.
Online References
- UK Corporate Governance Code
- Cadbury Report - Full Text
- Overview of the Cadbury Report and Governance
Suggested Books for Further Studies
- Corporate Governance by Robert A.G. Monks and Nell Minow - A comprehensive guide to corporate governance theory and practice.
- Principles of Corporate Governance by OECD - Standard reference on governance.
- Financial Ethics: Integrity and Accountability in Business and Finance by Esther Jeffers - It explores financial ethics with a focus on corporate governance practices.
Accounting Basics: “Cadbury Report” Fundamentals Quiz
Thank you for diving deep into the crucial aspects of the Cadbury Report and engaging with our structured quiz to solidify your understanding of corporate governance fundamentals!
