Stakeholders’ Perspectives on Nomination Committee Independence: Evidence from Iceland

Abstract Debates over the independence of nomination committees from corporate boards expose a fundamental tension in corporate governance theory. While agency theory prescribes independence to safeguard monitoring and accountability, stewardship and resource dependence perspectives emphasize the value of board involvement in fostering trust, information flow, and strategic alignment. From a stakeholder perspective, legitimacy arises not only from formal separation but also from how governance actors perceive and negotiate independence in practice. This study examines how these competing logics shape stakeholders’ interpretations of nomination committee independence in Iceland, a small economy with a Nordic two-tier governance model. Using a convergent parallel mixed-methods design, we integrate 13 semi-structured interviews with nomination committee members, board directors, and investors, along with survey data collected both in 2020 and 2023. Findings show broad support for limiting board members’ participation in nomination committees, with most respondents preferring either no board members or only one. Views vary across stakeholder groups, with investors being more open to board involvement than nomination committee members and board directors. Most respondents also reject automatic chair membership on nomination committees. Interview findings explain these patterns through four rationales: maintaining a connection with the board, securing access to company information, setting conditions and restrictions on board participation, and managing influence and responsibility dynamics. These rationales reflect competing agency, resource dependence, stewardship, and stakeholder logics. The study shows that nomination committee independence is a context-dependent construct shaped by governance culture, institutional maturity, and stakeholder roles. It contributes novel evidence from a Nordic governance setting and highlights how independence is evaluated and negotiated in a small, relational governance context.