While the US Sarbanes-Oxley Act (SOX) was singled out as a key driver among US directors, Australasian boards lead the world in terms of turning down directorships because of the perceived risk due to regulatory reforms.

According to the study from Korn/Ferry International, 83 per cent of directors in Australasia have refused to accept a board seat because of the inherent risk attached. That figure is markedly higher than refusals in the Americas, which came in at 59 per cent.

More than half of the Australasian organisations polled also reported that it is becoming more difficult to recruit high-quality directors. Indeed, close to 30 per cent of boards in the region have added a director with no prior experience in the past three years. Moreover, more than half of the Australasian directors polled said they would prefer a seat on the board of a privately-held company rather than a listed firm.

Compared with three years ago, 82 per cent of local directors said public company directorships are less attractive. Heightened financial and reputational risks were cited by 68 per cent of respondents as being the main drivers behind declining board invitations. Close to one third, meanwhile, said difficulties in adding strategic value were putting them off directorships. According to Korn/Ferry, this may be a reaction to the increased accountability of directors and the increasing amount of time boards are spending on compliance and internal oversight.

Among directors in the Americas, 72 per cent felt that SOX — which was passed in 2002 to shore up governance and accounting practices in the US — has made their boards more cautious. Close to 60 per cent of directors in the Americas said SOX should be repealed or overhauled. On costs, 53 per cent said SOX will cost them between US$1 million and US$5 million with 21 per cent looking at costs of between $6 million and $10 million.