‘Recklessness, hubris, & greed’: defining accountability for directors of large private companies

Accountability has been seen as a panacea, for curbing the unfettered power of individuals, with appropriate checks and balances. It has become mainly synonymous with regulating the behaviour of directors and the corporate governance of companies. Whilst there has been copious research regarding the accountability of directors in public limited companies, the accountability of directors of large private companies (LPCs) has not been explored. Although, when a corporate scandal/collapse has occurred; there is an acceptance that the accountability of directors was absent. However, there is little agreement on defining, developing and maintaining the modern concept of accountability. This research bridges this gap, by answering the central question of how directors of large private companies (LPCs) in the UK should be held accountable for their actions and decisions. As a result, it proposes a new theory of accountability termed ‘Holistic Accountability’ tailored to directors of LPCs. The generalisation of accountability definitions makes way for ‘Holistic Accountability’ due to the unique nature of LPCs. Indeed, some of the reasons why the accountability of directors of LPCs is needed are evidenced by three case studies which show that directors of LPCs can freely engage in illegal/questionable conduct. In considering which constituent is best placed to hold directors of LPCs accountable, the government stands out as the only possible constituent. Therefore, the current regulatory framework is examined to determine whether it enables the holistic accountability of directors of LPCs through the Financial Reporting Council (FRC) and the Pensions Regulator (TPR). The research finds that the focus of the FRC and TPR on financial reporting and pension schemes respectively fails to adequately fulfil each of the holistic accountability elements. In this regard, the roles of the Securities & Exchange Commission (SEC) and the Australian Securities & Investments Commission (ASIC), are also considered to determine what lessons could be learned in respect of the holistic accountability of directors in LPCs in the UK. The gaps identified in holding directors of LPCs holistically accountable through the current framework are also addressed, by building on some of the effective measures taken by both the SEC and ASIC for holistic accountability. For each of the proposals, recommendations for future research are put forward. Accordingly, the thesis concludes a UK corporate regulator should be established to enforce the holistic accountability of directors of LPCs. Failure to do so would mean the exacerbation of the current ‘black-box’ issue and further corporate collapses and scandals as a result of director misconduct.