Monitor, strategist, resource-gatherer or colleague? : regulating the independent director.

The independent director who comes in from outside to sit on the corporate board has become a feature of Australian corporate governance. These directors are seen as a solution to a number of corporate governance problems. This thesis examines the theory and regulation surrounding the independent director. The examination begins with the concept of independence. Regulation in Australia, and elsewhere, constructs independence criteria based on the idea that independence flows from the construction of extrinsic, structural barriers that prevent certain relationships. This is useful in establishing the legitimacy of the corporation's governance arrangements, but does not sit well with the idea that these directors should make a substantive contribution to the board decision-making. This thesis argues therefore that the concept of independence should be expanded to recognise a deeper form of independence, independence of mind. The thesis proposes four 'ideal types' of independent directors that promote independence of mind. These are the Monitor, who monitors management and performance; the Strategist, who provides advice; the Resource-Gatherer, who links the corporation to external resources; and the Colleague, who promotes collegiality within the board, and with management. These are investigated through the use of case study analysis and semi-structured interviews (n=10) in order to examine the extent to which they reflect the way directors work. Finally the thesis makes recommendations about how the existing 'soft law' regulation can be, and should be, amended to provide a clear and compelling vision of the independent director for the future.