Independent directors 'can harm board performance'

New analysis of executive recruitment trends has found that hiring independent directors may be associated with a negative impact on corporate boards.

The study, conducted by three University of Southern California professors, analysed 296 major global financial institutions following the recent recession, finding that companies with the most independent boards suffered the greatest stock-price declines.

David Erkens, one of the experts behind the study, told CFO magazine that independent directors were less likely to speak out against "extreme risk-taking".

The report - which was presented at the American Accounting Association's annual meeting, attended by 3,000 scholars and practitioners - also suggested that independent board members had greater reason to pressure companies into raising equity capital.

Since the publication of the study, its conclusions have been the target of controversy, with questions raised over whether the independence of the directors involved was the crucial factor.

However, Professor Erkens defended the report, saying: "Although causality is always difficult to prove in these types of studies, we feel we have compelling results."