MBA assignment for Research Methodology

Comparison between the Corporate Governance US & UK systems that relates to the Board of Directors and Executive Managers.

1. LONDON SCHOOL OF COMMERCE
19
th August 2014
Research Methodology
Assignment
MBA Part Time
Yousef Hamad
Tutor: Lester Massingham

2. 2

Table of Contents
Executive Summary ................................................................................................................................. 4
1. Title and introduction ...................................................................................................................... 5
Title ..................................................................................................................................................... 5
Introduction ........................................................................................................................................ 5
Investment Industry ......................................................................................................................... 5
LSF Overview ................................................................................................................................... 5
The problem .................................................................................................................................... 6
2. Rationality ....................................................................................................................................... 7
3. Research Question ........................................................................................................................... 7
Components ........................................................................................................................................ 7
4. Research Objectives and Framework ............................................................................................... 8
Conceptual Framework ........................................................................................................................ 8
5. Literature Review ............................................................................................................................ 9
Concept Roadmap ............................................................................................................................. 11
Roadmap ........................................................................................................................................... 12
Introduction ...................................................................................................................................... 13
Corporate-Governance .................................................................................................................. 13
Board/Leadership Structure ........................................................................................................... 14
The Debate ........................................................................................................................................ 14
UK-Model Advocates ..................................................................................................................... 15
US-Model Advocates...................................................................................................................... 17
Influential-Factors .......................................................................................................................... 19
Critique ............................................................................................................................................. 21
Conclusion ......................................................................................................................................... 22
References ........................................................................................................................................ 23
Bibliography ...................................................................................................................................... 24
6. Research Methodology and design ................................................................................................ 26
Title/Introduction .............................................................................................................................. 26
Problem Definition ............................................................................................................................ 26
Research Question............................................................................................................................. 26
Research Objectives .......................................................................................................................... 26

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Literature Review .............................................................................................................................. 26
Research Design ................................................................................................................................ 26
Research Strategy .............................................................................................................................. 26
Date and Information ........................................................................................................................ 27
Research Methods ............................................................................................................................. 28
Sampling Plan .................................................................................................................................... 29
Stratified-Sampling Method ........................................................................................................... 29
Procedure .......................................................................................................................................... 30
Analysis ............................................................................................................................................. 30
Report ............................................................................................................................................... 30
Conclusion/Recommendations .......................................................................................................... 30
7. Ethical Considerations.................................................................................................................... 31
8. Outcomes ...................................................................................................................................... 32
9. Gantt-Chart ................................................................................................................................... 32
10. References ................................................................................................................................. 33
11. Bibliography ............................................................................................................................... 35
12. Appendixes ................................................................................................................................ 37
Appendix-1 Corruption Index ............................................................................................................. 37
Appendix-2 UK-Model versus US-Model ............................................................................................ 38





Word Count: (3998) excluding tables, charts, references and appendixes.

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EXECUTIVE SUMMARY
Libyan Sovereign Fund LSF leads its subsidiaries and affiliates with lack of control and poor
Corporate-Governance system- the situation which stimulates the subsidiaries’ leaders
(chairman/CEO) to use their leverage excessively/incorrectly for their interest rather than that of
the shareholder. This sloppy situation with loose system helps to fraud, maximizes operating
costs, reduces performance thus increases the losses. Indeed some enterprises jeopardized and
liquidated.
Considering the new Libya’s regime significant dues, LSF embarked on an aspirant blueprint of
strengthening its institutions, valuing assets, and reforming the investment-sector to achieve the
overall mission and vision. Having effective Corporate-Governance processes is one of the
blueprint milestones. LSF aims to start with restructuring the subsidiaries’ leaderships by
applying one of the most dominant frameworks that supported mainly by the British Cadbury
Code, in-other-words “Separating the Chairman and CEO positions leads to effective/efficient
leadership hence better performance”.
Considering the relevant literature and relatively recent researchers’ contributions, this proposal
will investigate the UK-model and compare it with its opponent: the US-model which combines
the two roles.
Board (BoD) is the ultimate governing authority within the corporate-structure that
protects/represents the shareholders’ interests. Regardless the leadership-structure, either
separation or combination, shareholders elect BoD to overlook the business results and build
long-term value.
Although several organisations in different countries switched to the splitting approach, there are
still debates/arguments emerged as to which board-structure is better for better organisational
value. The reason behind such switching is not necessarily due to model effectiveness. It could
be legislation reasons as with the UK-framework which is not the case with the US-framework.
With the continual debate, there is no clear-cut evidence of optimal leadership-structure that suits
all organisations. There are other factors impact such structure thus the corporate performance
and value.

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1. TITLE AND INTRODUCTION
Title
Does splitting the Board Chairman and the CEO roles improve the performance?
Introduction
The author had worked for the Oil&Gas sector for about twenty years before he joined the
Libyan Sovereign Fund (anonymous: LSF) in 2011 where he held different leadership positions
such as board of directors (BoD) chairman, director, and manager. As a chairman of a holding
investment company, he has been requested to contribute to reforming/restructuring the sector
and present a research-proposal to LSF CEO.
Investment Industry
The state-owned investment sector mainly aims to promote and maximize the nation revenue
surpluses to (i) diversify non-oil economy, (ii) create wealth source for future generations, (iii)
motivate the Libyan economy via transformational-private enterprises creating joint-ventures
with international expertise and transferring knowledge, and (iv) secure stability against Libya’s
budget-shortfalls and volatile Oil&Gas revenues. This industry is led by LSF which is part of the
governmental-structure and reports directly to the Board-of-Trustees chaired by the Prime-
Minister.
Having an elected parliament for the first time since the early sixties of last century (after
Gaddafi’s dictatorship) and due to high corruption level in Libya (ranked 172/177, see
Appendix-1), the government is obliged to apply the transparency in all sectors including the
investment and rely on information-disclosure and corporate-control, ultimately for better
performance and higher return-on-investment. This led to assign new board and executives for
LSF in 2013 to start restructuring the sector.
LSF Overview
LSF had been established in 2006 as an investment fund independent on the other major state-
owned players before the previous regime government released the Investment Law-13 in 2010
to regulate the sector. Apart from direct investments, this law enhances LSF to own other five

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major investment subsidiaries (funds, portfolios and firms) which are in turn holding and sharing
national and international enterprises in different countries and industries, for instance finance,
Oil&Gas, hotels, ICT, agriculture and mining. Each subsidiary has different leadership-structure
stems from its Article-of-Association (AoA).
The problem
Ideally, in order to improve performance thus generating high return-on-investment, LSF needs
to have effective Corporate-Governance processes apart from other key steps. LSF should apply
control/monitor over the structure of its entire chain of subsidiaries those should operate at lower
costs and higher performance with no corruption. This requires having the right leadership-
structure.
Right now, LSF leads its subsidiaries and affiliates with lack of control and ineffective
Corporate-Governance system. Consequently, the subsidiaries’ leaders (chairman/CEO)
stimulated to grab/grasp more power and use it excessively/incorrectly (One-Man-Show). For
example, targeting extra remunerations, they fabricate missions and nominate themselves non-
executive chairmen and directors for the most valuable enterprises putting-on two hats
simultaneously: BoD hat and shareholder hat against the governance principles. Additionally,
many subsidiaries/affiliates suffer from not conducting the annual General-Assembly-Meeting
(Shareholders meeting). This sloppy situation with loose system helps to fraud, maximizes
operating costs, reduces performance thus increases the losses. Actually some projects
jeopardized and liquidated.
Unless LSF takes serious steps towards adopting a programme to overcome these problems,
monitoring/governing the existing complicated-chain of interrelated firms/enterprises are almost
mission-impossible thus more investments become bankrupt.
This work proposes to start with restructuring the subsidiaries’ leaderships by applying one of
the most dominant frameworks that supported mainly by the British Cadbury Code, in-other-
words “Separating the Chairman and CEO positions leads to effective/efficient leadership hence
better performance”. Considering the relevant literature and relatively recent researchers’
contributions, this UK-model will be investigated and compared to its opponent: the US-model
which combines the two roles.

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2. RATIONALITY
Considering the new Libya’s regime significant dues, LSF embarked on an aspirant blueprint of
strengthening its institutions, valuing assets, and reforming the sector to achieve the overall
mission and vision. Having effective Corporate-Governance processes is one of the blueprint
milestones.
Consequently, and as the leadership-structure is one of the most significant corporate-governance
pillars, the blueprint will start with revising the subsidiaries’/affiliates’ AoAs focusing on
whether or not “Splitting the Chairman and CEO jobs leads to effective/efficient leadership
hence better performance”.
3. RESEARCH QUESTION
Does splitting the Chairman and CEO jobs lead to effective/efficient leadership hence better
performance?
Components
1. What is the leadership-structure importance to the corporate-governance?
2. Does good/bad leadership impact the corporate-governance?
3. Is separating the chairman and CEO positions better than combining them?
4. Do separating and/or combining the roles affect the operating costs?
5. Do separating and/or combining the roles affect the subsidiaries/affiliates performance?
This research proposal fundamentally aims to attain meaningful contextually pertinent answer to
the above questions which must now be converted into measurable objectives.

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4. RESEARCH OBJECTIVES AND FRAMEWORK
1. To define the significance of leadership-structure to the corporate-governance.
2. To understand the influence of leadership structure and quality on the corporate-
governance effectiveness.
3. To investigate whether or not the splitting-approach of leadership roles (UK-model)
excels the combination-approach (US-model).
4. To see if the operating costs are affected by the l eadership-structure
(separation/combination).
5. To see the impact of current leadership-structure on the subsidiaries/affiliate
performance.
Conceptual Framework
This matrix represents the framework that would drive the design of the research
proposal. This framework is relevant to fulfilling the research objectives, looking for
time and cost efficiencies, and resourcing adequacy. It is an effective model to for
managing this project.
Framework Components
Research Objective
(RO)
See
Sect.
1 2 3 4 5
Literature Review: considered to confirm, justify or
amend the research question (RQ).
5
Information Spec.: what are the precise bits of
information should be collected to answer the RQ.
6
Desk Research: what secondary data applied for
each RO.
6
Primary Research: what primary data applied for
each RO.
6

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5. LITERATURE REVIEW

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Concept Roadmap

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Roadmap

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Introduction
Board of Directors (BoD) is in charge of directing/controlling their organisations through
corporate-governance system. An appropriate governance-structure takes place when the
shareholders –for their interest- designate effective directors and qualified external-auditor. BoD
roles include identifying the organisation strategic goals, securing the leadership to position them
into action, overlooking/monitoring the management and communicating to the stockholders on
their stewardship. The BoD decisions/actions are subject to legislation, policies and stockholders
in Assembly-Meetings.
This literature-review attempts to find an answer whether or not “Splitting the Chairman and
CEO roles leads to effective/efficient leadership hence better performance” by delving into two
prevalent leadership-structures (dual and independent roles) those are widely used now-a-days in
the most of companies over the universe. This is important for reforming the
subsidiaries/affiliates.
A numerous of Cods and Reports have been applied in this literature-review to corporate-
governance including leadership-structure, for instance but not limited to (Financial Reporting
Council, 2012), (Higgs Report, 2003), (CalPERS, 1998), (London-Stock-Exchange Committee
on Corporate-Governance, 1998), (Greenbury, 1995), (Cadbury, 1992), (Sarbanes-Oxley Act of
2002 Public Law 107-204, 107
th
Congress).
Corporate-Governance
Economist/Nobel-Laureate, Milton Friedman says: “Corporate-governance is to conduct the
business in accordance with the owner’s or shareholders’ desires, which generally will be to
make as much money as possible, while conforming to the basic rules of the society embodied in
law and local customs” (Fernando, 2009, p.14).

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Board/Leadership Structure
Board (BoD) is the ultimate governing authority within the corporate-structure that
protects/represents the shareholders’ interests. BoD has two predominant structures either
splitting or combining the chairperson and CEO positions. Regardless the structure, shareholders
elect BoD to overlook the business results and build long-term value. (Tsamenyi and Uddin,
2008; Diamond, 2005)
Baker (2008) asserted that often the crises are caused by inadequate corporate-governance; in-
other-words, business leadership and corporate-governance among other reasons were the causes
of the credit bubble.
According to the recent focus on share-ownership, organisational-shareholders aim how to affect
corporate-governance and improve performance from inside the organisation by enforcing the
BoD to improve performance via strategic-leadership/guidance and effective monitoring for
corporate management (Davis, 2009).
The Debate
Splitting the chairman and CEO roles has been a big debate of plenty governance activist and
shareholders. The separation practice is prevalent in the UK and elsewhere, whilst the opposite is
in the US where the combination approach is more common.
Inefficient management causes less profitability thus leads corporate-governance to fail.
However, even with efficient manager that maximizes shareholders’ profits; the corporate-
governance could fail. Because this manager may divert/transfer a portion from those profits to
his/her interest through excessive prerequisites consumption such as excessive remuneration
unbounded to performance (Keasey et al. 2005).
Additionally, BoD is mandated to protect/promote the owners’ interest those who deem applying
monitoring/control is costly. According to the empirical-literature, the BoD effective monitoring
depends on three key elements: BoD size, independence (both well-promoted by theoretical-
literature), and leadership-structure which is a debatable corporate-governance topic whether
splitting or combining the two positions fulfills high-performance.

15. There are two contradictory theo
Agency-theory
Developed by Jensen and Meckling (1976)
which advocates the separation between
finance and management (agent) where the
firm’s leadership-structure diminishes the
agent (manager) cost, e.g. UK

(Carapeto et al. 2005; Clarke, 2007; Keasey et al. 2005)
UK-Model Advocates
Cadbury (1992), Higgs (2003) and others support this approach. British corporate
key aspect is “A single board collectively responsible for the sustainable success of the
company” (FRC, 2012 p.2).
London-Stock-Exchange mandated firms to c
Cadbury-Code, or justify the contrary (Baker, 2008).
adopted the UK-model in the last decade (
15
There are two contradictory theories represent this argument:
theory Organisational
Developed by Jensen and Meckling (1976)
which advocates the separation between
finance and management (agent) where the
structure diminishes the
. UK-Model.
It believes that a firm’s high
achievable only if the CEO is fully authorized
with obvious and unchallenged role
(combined/duality role), e.g. US

; Clarke, 2007; Keasey et al. 2005)
Cadbury (1992), Higgs (2003) and others support this approach. British corporate
A single board collectively responsible for the sustainable success of the
mandated firms to communicate whether or not they followed
Code, or justify the contrary (Baker, 2008). After the economic crisis
model in the last decade (Deloitte, 2012; Tribbett, 2012).
Organisational-theory
believes that a firm’s high-performance is
achievable only if the CEO is fully authorized
with obvious and unchallenged role
, e.g. US-Model.
Cadbury (1992), Higgs (2003) and others support this approach. British corporate-governance
A single board collectively responsible for the sustainable success of the
ommunicate whether or not they followed
economic crisis, many organisations

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Davis (2009) claimed that leading BoD by non-executive chairman is a powerful answer to the
performance aspects influencing plenty American corporations. He concluded that the
independent roles have demonstrated that the framework successfully functions in the North-
American context.
Hodgson and Ruel (2012) argued that Chairman and CEO are the most bossy/authoritative
positions in a company’s boardroom. Combining both into one role led by an individual causes
no power balance where the CEO monitors himself/herself reflecting a clear conflict of interest.
Combination, at initial glance, does not make sense because it looks like wolf guarding sheep-
house (Lorsch and Zelleke, 2005). CEO in the US-model usurps the BoD power, leaving it
enfeebled with just nominal roles (Clarke, 2007).
Hodgson and Ruel (2012) went on: if the CEO key-role is to run the firm, while that of the board
is to watch the CEO performance/decisions in the shareholders sake, how such board effectively
monitors the CEO who is also the board chairman? GMI Ratings
1
data analysis proposes that
more practical considerations would enhance the splitting approach. Moreover, a combined
chairman/CEO cost is 60% higher than the total cost of chairman and separate CEO.
Combination has higher environmental, social, accounting and governance risks, and low return
on investment on-the-long-run. It also scores far worse on AGR Ratings
2
those tests financial-
statements and fraud.

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Furthermore, Baker (2008) claimed that the US combined legislatively-based model is deemed
more costly and less flexible than the UK-model. The American corporate-governance is no
longer the emulated gold-standard worldwide though American corporations keep dominating
many significant fields of the global economy. He claimed though that establishing a vigorous
dialogue between the shareholders and the BoD for the UK-model is significant without which
there are risks of having deficient corporate-governance; hence imposing government to divert
the responsibility of applying corporate-governance form shareholders to regulators- the issue
that makes the UK-framework less flexible thus incurs additional compliance costs. He also
posited that the UK has introduced -over fifteen years- a discerning corporate-governance.
Revolving around the comply-or-explain principle and Combined-Code, there is an increasing
favor universally among policy makers for this framework due to its ability of promoting high
governance standards without choking the wealth generation process. Additionally, Carapeto et
al. (2005) used a sample of 250 British companies to evaluate the decision of
combination/separation. They inferred that the separation is greeted with
important/positive/abnormal returns (but negative with the combination) which are substantially
linked to different measures of agency-cost. However, they observed nor robust over-
performance from the separation-approach neither underperformance from the combination-
approach.
In other context, Nowland (2008) concluded from his study to number of East-Asian firms have
direct proof that implementing Western splitting board practices has many advantages, and
found-out that separating roles, auditing, committees nomination, and improving board
governance have positive relationship with relevant operating performance.
However, Dedman and Lin (2002) found sold links between separation and poor performance.
US-Model Advocates
In contrast, and according to Anderson and Anthony (1986), combination is preferable, as it
provides sole-central-point for the firm leadership to project apparent sense of direction.
Furthermore, Companies with split-roles are more susceptible to financial-tribulation
(Simpson/Gleason, 1999), and there is a negative market-reaction with separating positions,
whereas a positive financial-performance with combining jobs (Brickley et al., 1997).

18. Moreover, Lorsch and Zelleke (2005) posited that more than fifty American and British board
directors have been interviewed in major public firms in both countries where concluded that the
UK-framework is not the panacea as its proponents signi
consensus that American boards want
characteristic drawbacks with the separation
necessarily the British-framew
Yet, the following graph weighs
Kristie (2010) cited that upon being named chairman, Ed Whitacre Jr. said “
be a chairman and not a CEO
dilemma later in 2010 by adding CEO title.
18
Moreover, Lorsch and Zelleke (2005) posited that more than fifty American and British board
directors have been interviewed in major public firms in both countries where concluded that the
framework is not the panacea as its proponents signify. This is not to state that the
consensus that American boards want autonomous leadership is incorrect, but there are
characteristic drawbacks with the separation-approach to attain such leadership which means not
framework has clear improvement over the American.
weighs the separation in America versus other countries
Kristie (2010) cited that upon being named chairman, Ed Whitacre Jr. said “
CEO” to top General-Motors’ executives in 2009 and he disbanded that
dilemma later in 2010 by adding CEO title.
Moreover, Lorsch and Zelleke (2005) posited that more than fifty American and British board
directors have been interviewed in major public firms in both countries where concluded that the
fy. This is not to state that the arising
leadership is incorrect, but there are
approach to attain such leadership which means not
ork has clear improvement over the American.
other countries in 2003.

Kristie (2010) cited that upon being named chairman, Ed Whitacre Jr. said “I don’t know how to
Motors’ executives in 2009 and he disbanded that

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Influential-Factors
Many contributors/researchers linked the decision of adopting either framework to vital factors
described hereinafter.
A panel of about twenty business and governance leaders took place at the University of
Delaware, USA in 2009 to discuss the pros-and-cons of the splitting-approach. The discussion -
with diverse opinions- has deeply explored the separation advantages, concluding that there will
be opportunities of diminishing the two top roles which same person holds at the US
corporations. Nevertheless, the separation should not happen while someone handles both
positions but factorized into the sequential planning process. Although the panel-consensus that
the separation is a meritorious idea, no one believes in mandating/enforcing the separation by
judicial order and/or government-statute. (Kristie, 2010)
Moreover, focusing foremost on roles separation could disregard a key dimension/proposition of
influential/efficient board leadership, and instead the incumbent/potential board chairperson
should be the focus. Implementing the separation can be postponed until finding the suitable-
competent person to handle the board chair position, continuing with combined-structure, but
better with lead-director (Tonello, 2011).
In any case the corporate-governance system should consider the management efficiency and
stewardship (Keasey et al. 2005).
Furthermore, Chandler
3
asserted that, as Kristie (2010) cited, selecting the right candidate to fill
the split position is vital, as any clash/conflict between the chairperson and CEO can create lots
of difficulties. He added that identifying/choosing the best candidates to be the chairpersons will
depend on their attributes, e.g. skills/experiences, and availability which is competent to deliver
the chairperson position in different organizations that would avail of the segregation.

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Deloitte (2012) asserted that the debate of combining/splitting the two positions will probably
persist. Despite S&P-500 majority firms apply combination-model, there is a clearly-notable
increase in switching to the separation-model.
However, it is mostly agreed that the leadership-structure selection depends on the company’s
perspective and circumstances; no particular approach could serve all organisations in all
situations/circumstances (Deloitte, 2012; Tonello, 2011).
Furthermore, Leighton and Herrndorf (2002) believed that the roles clarity, good
communication, BoD support and reciprocal respect between both heads are key factors in
functioning the splitting approach. Organisational-performance is eventually the BoD
responsibility which is –if strong- deemed incalculable asset, while –if weak- deemed recipe for
disaster. They asserted that BoD members’ selection is crucial to effective governance so
creating congruence. They are against combining the two positions unless there are
unusual/critical situations. There must be a clear distinguish between the roles in-a-way that both
feel engaged in the operations and share the success. Clarke (2007) raised an important issue:
despite the various corporate-governance principles that elaborate the BoD roles, they do not
explain how to arrange/manage the relationship between BoD and CEO to avoid any interference
with their roles.
Tribbett (2012) argued that the US-framework was historically weighing, whereas currently the
UK- framework is the strong trend, but carful weighing is needed for the organisation. As the
leadership-structure and performance relationship is concerned, Tonello (2011) claimed that
there is an unsteady Academic-Literature, and even the separation-approach is not decisive. He
cited three studies:
1.
Baliga et al. (1996) They found weak proof that combination influences the performance
on the long run, after controlling different elements which may
affect the performance.
2. Bennington (2010) He summarized there is no statistical link between splitting-approach
and company’s performance.
3. Dalton et al. (2007) They concluded no substantive evidence of systemic relation
between leadership-structure and financial-performance.

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Carapeto et al. (2005) and Franks et al. (2001) emphasized the solid correlation between poor
organisational-performance and BoD turnover where leaders/directors have high leverage in
British firms.
Critique
Although several organisations in different countries switched to splitting approach, there are
still debates/arguments emerged as to which board-structure is better for better organisational-
performance. See Appendix-2 for comparison between the two models.
The reason behind such switching is not necessarily due to model effectiveness. It could be
legislation reasons as with the UK-framework which is not the case with the US-framework.
With the above continual debate, there is no clear-cut evidence of optimal leadership-structure
that suits all organisations.
Apart from the potential research, the author recommends that further attention should be paid to
some serious board/leadership issues those generally weaken boards, disrupt the business and
can lead subsidiary/affiliate to bankruptcy:
1. Many directors hold numerous memberships within several organisations for the sake of
more money from board compensations.
2. Some shareholders’ representatives and BoDs ignore conducting the assembly meetings.
3. Some shareholders’ representatives select poor external auditors.
4. Some chairman’s and CEOs utilize their leverage in appointing themselves non-executive
chairmen for subsidiaries, being shareholder representative and board director in the same
time, breaking the corporate-governance fundamentals.
5. Many Some shareholders’ representatives and chairpersons do not adhere to the subsidiary
AoA in terms of the directors’ number within the board.

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Conclusion
According to this literature-review, each approach has its own pros-and-cons with no compelling
argument for separation or combination; hence none of them is a perfect/ideal solution for
effective/efficient leadership and effective governance. But, there are vital factors those should
be considered with either structure/framework such as the director/leader experience/skills,
relationship/dialog between chairman and CEO, company circumstances/context, management
stewardship, and director leverage.
Consequently, more questions are emerged:
· What corporate-governance procedures and measures should be undertaken to improve the
organisation value?
· What attributes/qualifications leaders should possess that realize effective-governance and
improve the organisation value?
· Do the current leaders and board-structure of the subsidiary/affiliate suit its context?
Even though, with the lack of law regulates the corporate-governance including leadership-
structure, the sector reformation has no meaning.

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Journal of Business Ethics, 79(1-2), pp.133--150.
21. Simpson, W.G., A.E. Gleason, 1999, Board structure, ownership, and financial distress in
banking firms, International Review of Economics and Finance 8, 281–292.
22. Tonello, M. (2011). Separation of Chair and CEO Roles. [online] The Harvard Law School
Forum on Corporate Governance and Financial Regulation. Available at:
http://blogs.law.harvard.edu/corpgov/2011/09/01/separation-of-chair-and-ceo-roles/
[Accessed 22 Jul. 2014].
23. Tribbett, C. (2012). Splitting the CEO and Chairman Roles—Yes Or No? Directors and
Boards, 5.
24. Tsamenyi, M. and Uddin, S. (2008). Corporate governance in less developed and emerging
economies. 1st ed. Bingley: JAI Press.
Bibliography
1. ASX CGC, (2007), Corporate Governance Principles & Recommendations with 2010
Amendments, 2
nd
Edition, Sydney, ASX Corporate Governance Council.
2. Behrens, J. (1997). Principles and procedures of exploratory data analysis. Psychological
Methods, 2(2), p.131.
3. Finkelstein, S., Hambrick, D. and Cannella, A. (2009). Strategic leadership. 1st Ed. New
York: Oxford University Press.

25. 25

4. Franks, J., C. Mayer, and L. Renneboog, 2001, Who disciplines management in poorly
performing companies? Journal of Financial Intermediation 10, 209-248.
5. Kennon, J. (2014). Board of Directors - Responsibility, Role, and Structure. [online]
About.com Investing for Beginners. Available at:
http://beginnersinvest.about.com/cs/a/aa2203a.htm [Accessed 14 Aug. 2014].
6. LEADERSHIP ACUMEN, (2005), Models of Corporate / Board Governance, Doug
Macnamara & Banff Executive Leadership Inc.
7. Martin, D. (2006). Corporate governance. 1st ed. London: Thorogood.
8. McNulty, T., Florackis, C. & Ormrod, P. (2012). Corporate Governance & Risk: A Study of
Board Structure and Process. 1st ed. London, The ACCA.
9. Molz, R. (1984). Corporate boards of directors. 1st Ed.
10. OECD, (2004), Principles of Corporate Governance, Paris, OECD Publication Service.
11. Rezaee, Z. (2009). Corporate governance & ethics. 1
st
ed. Hoboken, NJ: John Wiley&Sons.
12. Rizwan, M. (2012). Department of International Relations: Deductive & Inductive Methods
in Research. [online] Profrizwan.blogspot.co.uk. Available at:
http://profrizwan.blogspot.co.uk/2012/12/deductive-inductive-methods-in-research.html
[Accessed 6 Aug. 2014].
13. Ruan, W., Tian, G. and Ma, S. (2011). Managerial ownership, capital structure and firm
value: Evidence from China’s civilian-run firms. Australasian Accounting Business and
Finance Journal, 5(3), pp.73--92.
14. Tricker, R. (2012). Corporate governance. 1st ed. Oxford: Oxford University Press.
15. Trochim, W. (2006). Design. [online] Social Research Methods. Available at:
http://file:///C:/Users/user/Dropbox/RM%20Assignment/Q6/Design.htm [Accessed 6 Aug.
2014].
16. Vance, S. (1964). Boards of directors: structure and performance. 1st ed. [Eugene]: [School
of Business Administration, University of Oregon].
17. www.icgn.org
18. www.investopedia.com
19. www.scholar.google.co.uk
20. www.wikipedia.com

26. 26

6. RESEARCH METHODOLOGY AND DESIGN
Title/Introduction
Does splitting leadership-roles improve performance?
Problem Definition
LSF leads its subsidiaries/affiliates with lack of control/governance which affects negatively the
performance.
Research Question
Does splitting the Chairman/CEO positions improve the performance?
Research Objectives
To see if the separation improves the performance.
Literature Review
Exhibiting the researches/debates about the American and British frameworks of leadership-
structure and their impact on cost and performance.
Research Design
As there is no solid-clue to follow or theory to validate/apply, the research will use the
exploratory/inductive approach to investigate the problem and provide relevant insights and
empirical and literary evidences. Data will be collected and analyzed sorting-out patterns and
drawing on them in developing a theory that enables choosing between US/UK frameworks.
Research Strategy
Since the State is a major shareholder of all targeted organisations, governmental-archives
contain lots of data like administrative-records, statistics and annual-reports outlining the past
achievements and future plans/priorities (Easterby-Smith et al., 2012), accordingly “Archival-
Research” is chosen. However, interviews with leaders and employees could be conducted, when
needed, along with the archival-research (Bakker, 2013).

27. 27

Date and Information
Although the research is exploratory that deals with qualitative-data, in some narrow situations
quantitative-research is needed to verify the latter qualitative-research (Course-Manual).
The following table lists the different data types and sources.
Data Needs Primary Secondary
Quantitative Budget deficiencies/variances
Operational and agency costs
Leaders’ Remunerations
Company size
Managerial ownership
Number of BoD directors
Stock prices
Annual turnover
Profitability and return on investment
Qualitative Reasons behind changing BoD
Switching date to new structure
Coordination Procedures
Performance history
Internal strengths/weaknesses
Leaders Leverage
Leaders pension, health problems, and
resignation
Corporate-governance system applied
Type of leadership structure
CEO roles
Chairman roles
Growth opportunities
Sources Leaders and Employees’ Interviews
Company’s policy
HR reports
Board’s minutes-of-meetings (MoM)
General-Assembly MoM
Internal Audit reports
National Audit Bureau reports
Other reports done by third party e.g.
affiliate’s due diligence
Surveys
Investment Law 13/2010
Company’s Article of Association
Institutional governance (Central
Bank of Libya)
Periodic firms reports and analysis
(financial, operational, risk, etc.)
External Audit and financial
statement reports
Online data
Stock Market
Surveys

28. 28

Research Methods
Research method means a technique to gather data involving particular instrument (Bryman and
Bell, 2011).
Exploratory-research conducted by three ways: literature-search, interviewing experts, and
interviewing focused-group, consequently collected data are analyzed coming-up with
conclusion (Saunders et al., 2009). It will deal with qualitative-data using different data-
collection methods to build-up various phenomena views (Easterby-Smith et al. 2008). However,
few quantitative-data are needed mainly to understand the causal-relationship amongst cost,
performance and leadership-structure, as quantitative-methods can be used in exploratory-
research (Bell, 2004) which has been quantitative in nature (Given, 2008).

The job will start first with Literature-research where there are many researches about
leadership-structure and its relationships with cost and performance, and collecting data from the
target firms’ archives and other secondary sources. This saves time and cost, as researcher works
from almost one place (archive). However he/she may move to the targeted organisations in
Libya which still does not consume much time and money.
In case archived/secondary data are not sufficient to answer the research-question, suitable
primary-research methods are used. Leader-interviews/deep-interviews will take place which
help in realizing the reasons behind the problem. Using questionnaire, face-to-face interview is
conducted for leaders in Libya, while those are overseas can be interviewed by phone. Focused-
group of employees in Libya may also be directly interviewed depending on the outcomes of the
latter techniques, ditto for overseas focused-groups but online.
Just in case, researcher can travel abroad to check subsidiaries/affiliates’ in-house archive, make
personal interviews using questionnaire, and perhaps interview focused-group of employees.
(Bryman and Bell, 2011; Course-Manual)

29. 29

Sampling Plan
One of the ways to execute the exploratory-research is the literature-research (Saunders et al.,
2009) under which many researchers undertook studies/surveys on numerous of international
organisations about their leadership-structures. For this reason, author does not see any necessity
to research international companies, as this needs big arrangement and resources, also obtaining
their primary data could be a pain because of, for instance data-protection. Accordingly, the
sampling will concentrate on selecting organisations from three main sectors:
1. Investment: LSF subsidiaries/affiliates (in Libya and abroad);
2. Banking: Major Libyan banks including the Central Bank;
3. Oil and Gas: Libyan major Oil&Gas operators which are best performing in Libya.

Sampling-frame: the target people in each target organisation are leaders, managers and
employees. This frame will be stratified into groups using Stratified-Sampling Method.

Stratified-Sampling Method
It is a modified method of random-sampling where the above frame divided into three strata
based on number of features e.g. power/responsibility degree. Sample is randomly drawn from
each strata using random-sampling approach (Saunders et al., 2009).

Strata Frame Sampling Fractions
1 Top leaders (chairman, CEO, and BoD
members/directors)
100%
2 Middle management and Executives 70%
3 Front-line employees 50%

30. 30

Same approach is applied for dividing the target organisations into four groups:

Strata Frame Fractions
Size
(No.)
Notes
1 Subsidiaries/Affiliat
es using UK-Model
65% -
From the author’s knowledge and
experience, 65% of the investment
subsidiaries/affiliates are reasonable
size, as the rest is small
firms/enterprises and researching
them is infeasible.
2 Subsidiaries/Affiliat
es using US-Model
65% -
3 Banks
- 9
Nine banks are the major banks in
Libya those have several
commonalities with the investment
companies.
4 Oil&Gas companies
- 14
Fourteen Oil&Gas companies are the
major operators using rigor
governance system and perform well-
the sector which is usual benchmark
in Libya.

Procedure
This includes planning and Gantt-chart, resourcing/budget and execution e.g.
formalities/approvals/consent letters, and collecting-data/conducting-interviews.
Analysis
EDA method will be used in analyzing the exploratory-data (Behrens, 1997), and NVivo
(Bryman and Bell, 2011).
Report
Set of information is emerged from the data analysis organized in logical flow that interests the
reader.
Conclusion/Recommendations
They will be issued based on the literature-review and data-analysis.

31. 31

7. ETHICAL CONSIDERATIONS
Several ethical-issues burst along the research journey which could lead into
dilemmas/challenges that complicate the process such as those listed in the right part of the table.
Those issues –if ignored- could also lead to breaking the research ethics. This proposal will
accommodate the ethical-principles assuring the points in the left part of the table.
Key Ethical principles Potential Dilemmas/Challenges
o No harm/disadvantages to respondents by
using data;
o Avert coercion and deception to obtain data;
o Ensure data confidentiality all times;
o Ensure consent to use gathered data;
o Organisation and individual anonymity
protection;
o Ensure transparency/honesty and ethical-
integrity while communicating the research;
o Avert any untruthful reporting and/or
misleading of research findings.
· Participant reluctance to answer all/some
questions;
· Some individuals might abuse the researcher
to leak data and information;
· Respondent may give false answers.

(Saunders et al., 2009; Easterby-Smith et al. 2008)

32. 32

8. OUTCOMES
A Formulate research problem/question, and accordingly propose appropriate/proper objectives
with relevant framework.
A Ability to illustrate skills in/perceive the significance of, the conventions needed for the
major research including experimental/non-experimental research design. Understand how to
prepare research-proposal.
A Review/assimilate several literature sources.
A Select appropriate research design/methods, and understand the differences
between/proposes of, Exploratory/Conclusive researches, ditto research-strategy with
different options/decisions.
A Learn/assess the differences between secondary/primary researches and data, and
qualitative/quantitative data, and proper selection-methods and collection-techniques. Also
plan sampling, locate sampling-frame and choose sampling-method, and decide ample-size.
A Understand the leadership-structure importance to/impact on corporate-governance, and how
this would realize an effective control over organisations.
9. GANTT-CHART

33. 33

10. REFERENCES
1. Bakker, W. (2013). W. Bakker, ‘Design History Research Guide: Interviews & Archives >
Tools’, Breda 2013. [online] Academia.edu. Available at:
https://www.academia.edu/3410978/W._Bakker_Design_History_Research_Guide_Intervie
ws_and_Archives_Tools_Breda_2013 [Accessed 8 Aug. 2014].
2. Barker R. (2008), The UK Model of Corporate Governance: An Assessment from the Midst
of a Financial Crisis, London, Corporate Governance, Institute of Directors.
3. Beam, C. and Tissing, R. (1984). The orientation interview in archival research. American
Archivist, 47(2), pp.173--178.
4. Brickley, J.A., J.L. Coles, and G. Jarrell, 1997, Leadership structure: Separating the CEO and
Chairman of the Board, Journal of Corporate Finance 3(3), 189-220.
5. Bryman, A. and Bell, E. (2011). Business research methods. 1st ed. Cambridge: Oxford
University Press.
6. C. M. Daily and D. R. Dalton, “CEO and Board Chair Roles Held Jointly or Separately:
Much Ado about Nothing?” (Aug, 1997). The Academy of Management Executive (1993-
2005), Vol. 11, No. 3, pp.11-20.
7. Cadbury, A. (1992). Report of the Committee on the Financial Aspects of Corporate
Governance. 1st ed. London: Gee.
8. Carapeto, M., Lasfer, M. and Machera, K. (2005). Does Duality Destroy Value? [online]
Papers.ssrn.com. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=686707
[Accessed 16 Aug. 2014].Clarke, T. (2007). International corporate governance. 1st ed.
Milton Park, Abingdon, Oxon: Routledge.
9. Central Bank of Libya, (n.d.). Institutional Governance. [online] Available at:
http://cbl.gov.ly/pdf/0J6j0iUKSRlkk1ycMO2.pdf [Accessed 2 Aug. 2014].
10. Course Manual.
11. Davis S. (2009), Chairing the Board: The Case for Independent Leadership in Corporate
North America, policy briefing no. 4, Millstein Center for Corporate Governance and
Performance, Yale School of Management
12. Davis, S. and Lukomnik, J. (2011). More Boards Splitting the Chairman and CEO
Roles. Compliance Week, 8(91), pp.48-49.

34. 34

13. Dedman, E. and Lin, S. (2002). Shareholder wealth effects of CEO departures: evidence from
the UK. Journal of Corporate Finance, 8(1), pp.81--104.
14. Deloitte, (2012), Board Leadership: The Split CEO/Chairman Structure Debate, Deloitte
Development LLC.
15. Diamond, A. (2005). Training your board of directors. 1st ed. Toronto: Productive
Publications.
16. Easterby-Smith, M., Thorpe, R. and Jackson, P. (2012). Management research. 4
th
Ed. Los
Angeles: SAGE.
17. Fernando, A. (2009). Corporate governance. 3
rd
Ed. New Delhi: Pearson Education.
18. Financial Reporting Council, (2012), The UK Approach to Corporate Governance
19. Higgs Report on Non-Executive Directors, (2003), UK
20. Keasey, K., Thompson, S. and Wright, M. (2005). Corporate governance. 1st ed. Chichester,
West Sussex, England: Wiley.
21. Kristie J. (2010), The Great Divide makes for a great debate, [online]
directorsandboards.com Available at:
http://www.directorsandboards.com/DBEBRIEFING/May2012/ElsonChair-CEOSplitRT.pdf
[Accessed 24 Jul. 2014].
22. Leighton, D. And Herrndorf, P. (2002), Are Two Heads Better Than One? International
Journal of Arts Management, Pp.4--8.
23. Lorsch, J. and Zelleke, A. (2005). Should the CEO Be the Chairman? | MIT Sloan
Management Review. [online] MIT Sloan Management Review. Available at:
http://sloanreview.mit.edu/article/should-the-ceo-be-the-chairman/ [Accessed 21 Jul. 2014].
24. LSE, (2012), Corporate Governance for Main Market and AIM Companies, 1
st
Ed, London,
White Page Ltd.
25. Nowland, J. (2008). Are East Asian companies benefiting from Western board
practices? Journal of Business Ethics, 79(1-2), pp.133--150.
26. Saunders, M., Lewis, P. and Thornhill, A. (2009). Research methods for business students.
5
th
ed. Harlow: Financial Times Prentice Hall.
27. Simpson, W.G., A.E. Gleason, 1999, Board structure, ownership, and financial distress in
banking firms, International Review of Economics and Finance 8, 281–292.

35. 35

28. Tonello, M. (2011). Separation of Chair and CEO Roles. [online] The Harvard Law School
Forum on Corporate Governance and Financial Regulation. Available at:
http://blogs.law.harvard.edu/corpgov/2011/09/01/separation-of-chair-and-ceo-roles/
[Accessed 22 Jul. 2014].
29. Tribbett, C. (2012). Splitting the CEO and Chairman Roles—Yes Or No? Directors and
Boards, 5.
30. Tsamenyi, M. and Uddin, S. (2008). Corporate governance in less developed and emerging
economies. 1st ed. Bingley: JAI Press.
11. BIBLIOGRAPHY
1. ASX Corporate Governance Council, (2007), Corporate Governance Principles and
Recommendations with 2010 Amendments, 2
nd
Edition, Sydney, ASX Corporate Governance
Council.
2. Behrens, J. (1997). Principles and procedures of exploratory data analysis. Psychological
Methods, 2(2), p.131.
3. Finkelstein, S., Hambrick, D. and Cannella, A. (2009). Strategic leadership. 1st Ed. New
York: Oxford University Press.
4. Franks, J., C. Mayer, and L. Renneboog, 2001, Who disciplines management in poorly
performing companies? Journal of Financial Intermediation 10, 209-248.
5. Kennon, J. (2014). Board of Directors - Responsibility, Role, and Structure. [online]
About.com Investing for Beginners. Available at:
http://beginnersinvest.about.com/cs/a/aa2203a.htm [Accessed 14 Aug. 2014].
6. LEADERSHIP ACUMEN, (2005), Models of Corporate / Board Governance, Doug
Macnamara & Banff Executive Leadership Inc.
7. Martin, D. (2006). Corporate governance. 1st ed. London: Thorogood.
8. McNulty, T., Florackis, C. and Ormrod, P. (2012). Corporate Governance and Risk: A Study
of Board Structure and Process. 1st ed. London, The Association of Chartered Certified
Accountants ACCA.
9. Molz, R. (1984). Corporate boards of directors. 1st Ed.
10. OECD, (2004), Principles of Corporate Governance, Paris, OECD Publication Service.

36. 36

11. Rezaee, Z. (2009). Corporate governance and ethics. 1st ed. Hoboken, NJ: John Wiley &
Sons.
12. Rizwan, M. (2012). Department of International Relations: Deductive & Inductive Methods
in Research. [online] Profrizwan.blogspot.co.uk. Available at:
http://profrizwan.blogspot.co.uk/2012/12/deductive-inductive-methods-in-research.html
[Accessed 6 Aug. 2014].
13. Ruan, W., Tian, G. and Ma, S. (2011). Managerial ownership, capital structure and firm
value: Evidence from China’s civilian-run firms. Australasian Accounting Business and
Finance Journal, 5(3), pp.73--92.
14. Tricker, R. (2012). Corporate governance. 1st ed. Oxford: Oxford University Press.
15. Trochim, W. (2006). Design. [online] Social Research Methods. Available at:
http://file:///C:/Users/user/Dropbox/RM%20Assignment/Q6/Design.htm [Accessed 6 Aug.
2014].
16. Vance, S. (1964). Boards of directors: structure and performance. 1st ed. [Eugene]: [School
of Business Administration, University of Oregon].
17. www.icgn.org
18. www.investopedia.com
19. www.scholar.google.co.uk
20. www.wikipedia.com

37. 37

12. APPENDIXES

Appendix-1 Corruption Index



Source: http://www.transparency.org/corruption perceptions index 2013 brochure

38. 38

Appendix-2 UK-Model versus US-Model


Source: Lorsch, J. and Zelleke, A. (2005).