The domination of the big four on Australia’s corporate boards

Professionals account for more than 90 per cent of the directors on top 100 company boards.

Dr Claire Wright, of Macquarie Business School, is about to publish comprehensively on work that tracks board membership since 1910.

If your ambition is to join one of the nation’s top corporate boards you could do worse than opt for a degree in accounting or the law. Then do all you can to join one of the big four professional service firms and hang on till you make partner. Around 50 or so you can happily say goodbye to your colleagues with the expectation that your professional experience and accreditation will prompt an invitation to join an ASX publicly listed company board.

As Dr Claire Wright, of Macquarie Business School, has found, professionals account for more than 90 per cent of the directors on top 100 company boards.

“This proportion has grown steadily over the 20th century, and stabilised at around 90 per cent since the 1990s,” she tells The Deal. “Within this, accountants are important, with about 25 per cent of members accredited in this profession.”

Most, she says, come through the big four of Deloitte, PwC, KPMG and EY, and have held senior partner roles there. Big law firms and other accounting firms also supply many directors from their ranks.

Wright, who is a postdoctoral research fellow, has been looking at our top 100 companies and how the composition of directors has changed over the 20th century. She is about to publish comprehensively on work that tracks board membership since 1910. There has been enormous change over time although professionals have been important to boards since the start with accountants and lawyers seen as sensible and “moral” and good citizens.

There are practical reasons too for having an accountant or audit specialist or a mergers and acquisitions expert on your board because they help with the increasingly complex regulatory environment. This demand has grown across the decades as regulations thickened.

Says Wright: “In the 1910s and 1930s you might have had entrepreneurs or fancy social class people or hereditary power whereas in the ’90s, the 2000s and 2010s it is much more just top professionals, who have done all the accreditation. They are not necessarily former chief executives. Their boardroom experience comes from being part of Deloitte or whatever.”

Wright was surprised. She had expected more former politicians, more “Packers and Myers and Frank Lowy’s kids”, more hereditary positions. Instead they are very much the exception, she says.

The accountants were increasingly sought after as their firms merged in the 1950s and 1970s to create the big eight; then in the ’80s and ’90s merged again to form the big six and from 2001 the big four.

The age profile of the partners turned directors has not changed with people typically in their 50s and 60s making the jump. As well they continue to be a homogenous bunch of upper-class white people. The accountants were seen as objective and moral and good citizens and in a sense operating as a moral handbrake on the boards.