After the OFR: Can UK Shareholder Value Still Be Enlightened?

Abstract

This article examines the likely impact of the United Kingdom's Company Law Review (CLR) on its system of corporate governance. The CLR recommended that company law should be amended to require companies to pursue ‘enlightened shareholder value’. This would be ensured primarily through a requirement on listed companies to produce an Operating and Financial Review (OFR). The OFR was introduced into law but was recently unexpectedly abolished by the Chancellor. The article examines the theoretical approach taken to corporate governance by the CLR and the way in which the OFR was expected to affect corporate governance. It then asks whether shareholder value would in fact have been enlightened by the OFR, given the institutional context in which it would have operated. While there are considerable grounds for scepticism about whether the OFR would have worked as the CLR expected, it is unfortunate that it was withdrawn because it was an important experiment in disclosure of qualitative information about intangible assets. The article concludes with some thoughts about whether shareholder value could still be enlightened in the absence of a mandatory OFR.