The Irish Stock Exchange has described a report criticising the independence of Irish non-executive directors as "flawed" and reaching "inconsistent, inaccurate and misrepresentative" conclusions.

The Exchange's head of listing, Ms Deirdre Somers, has written to the authors, Prof Niamh Brennan and Mr Michael McDermott of University College Dublin, highlighting the alleged inaccuracies.

In the letter, seen by The Irish Times, Ms Somers, said it was regrettable that the authors had not consulted the Exchange in relation to their considerations and conclusions.

"We find the research in the report flawed and its conclusions inconsistent, inaccurate and misrepresentative of the true position of both compliance in the Irish market and the position of the ISE as regulator," the letter states.

Ms Somers said it was unfortunate that this research did not seek to present an analysis of the state of preparedness for the changes and challenges presented by the Higgs Report on corporate governance carried out for the Department of Trade and Industry in the UK, but instead drew conclusions on compliance with that report where none should be drawn.

"In so doing, we believe that a misleading impression has been given of the Irish market and a potentially valuable opportunity to contribute to the continuing debate on corporate governance was, unfortunately missed," she said in the letter.

Ms Somers said yesterday it was important to challenge statements that were inaccurate.

"This is more than a domestic debate. It affects the perception of the Irish stock market. There is a need to be sure that what is being said is correct."

The report was undertaken by the Institute of Directors Centre for Corporate Governance at University College Dublin and was published last month.

Yesterday, Prof Brennan, said she welcomed the correspondence.

"Our research is fulfilling its objective - to lead a general debate on improving the standards of corporate governance in Ireland," she said.

The report warned that if the Higgs recommendations, which are due to take effect in the UK from November 1st, were to be fully implemented, many Irish listed companies would need to make considerable improvements to their board structures before they could be judged to be fully independent.

The research was based on 80 of the 81 companies listed on the Irish Stock Exchange in July 2002.

Ms Somers said the authors concentrated on the annual reports submitted by these companies in 2000 and 2001 and three for 2002.

"The Higgs Report had not even been published at the time the research covers so it would have been impossible for companies to comply," Ms Somers states.

Prof Brennan said it had not applied the current standards but had sought to use higher ones because of their shortcomings.

ISE chief executive, Mr Tom Healy, said that while the Higgs Report poses some challenges for Irish public companies he was "totally confident" that the sector would respond. "It is in their own interest.