Corporate Governance Agenda Research Articles

The independent non-executive director: Origins, regulation and persistent challenges

The premise that non-executive directors acting independently from management is essential to the integrity of the company board has driven much of the corporate governance agenda for decades. This is the case, despite conflicting empirical evidence of the value or contribution of independent non-executives. In addition, the exact meaning of ‘independence’ in the context of the corporate board remains opaque, and expectations regarding the role and remit of the office are far from settled. This article elaborates on some of these themes. The discussion will introduce the reader to the salient concepts and offer an overview of the most prominent discourse and recent developments with reference to approaches in the United States, the United Kingdom, the European Union and other jurisdictions. Ultimately, the paper contributes to the ongoing debate surrounding the efficacy of the independent non-executive director as a critical oversight mechanism in good corporate governance and the extent to which regulation can and should scaffold the office.

The Governance of Business Continuity Management Practices in Public and Private Sectors

While many external drivers have uplifted the importance of BCM to a greater level within the corporate governance agenda, they have also challenged the organizations to assess whether their actions should be merely to conform with the minimum requirements as outlined by the regulators or to take on a more strategic approach i.e. to exceed the minimum requirements with the intention of enhancing their BCM capabilities further. In some countries, health care and financial sectors are obliged to make sure that service continuity in their information system operations are in accordance to regulatory guideline. Hence, this paper will present the governance initiatives of BCM practices in public and private Sectors globally and specifically in Malaysia.

Sustainable Corporate Governance – The Purpose of the Company

The objective of this paper is to explore the latest trends in sustainable corporate governance with а focus on the purpose of the company. Referring to her previous research projects and publications, the author aims to build on the preceding findings and research results. The objective of the paper is to give an answer to whether company purpose (the new mantra) is a totally new concept within the framework of corporate governance or, in other words, whether the business community has changed completely and whether a new business model has been developed by academia, consultants and business leaders. To answer these questions the author has initiated a literature survey and web mining to get a fresh perspective from the corporate practices in the EU and US economies. Experts’ views and judgement are discussed in order to obtain information about the agenda and priorities of listed Bulgarian companies. The paper is structured as follows: overview of sustainable corporate governance (introduction); survey on the academic views on the purpose of the company (part one); investigation of the business views on the purpose (part two) and the corporate governance agenda – shareholders’ perspective on the purpose studies (part four) and conclusions and suggestions for future research.

The Giant Shadow of Corporate Gadflies

Modern-day shareholders influence corporate America more than ever before. From demanding greater accountability of executives to lobbying for a variety of social and environmental policies, shareholders today have the power to alter how American companies are run. Amazingly, a small group of individual shareholders wields unprecedented power to set corporate agendas and stands at the epicenter of our contemporary corporate governance ecosystem. In fact, the power of these individuals, known as “corporate gadflies,” continues to rise. Corporate gadflies present a puzzling reality. Although public corporations in the United States are increasingly owned by large institutional investors, much of their corporate governance agenda has been and is still dominated by a handful of individuals who own tiny slivers of most large companies. How does an economy with corporate equity in the trillions of dollars cede so such governance power to corporate gadflies? More importantly, should it? Surprisingly, scholars have paid little attention to the role of corporate gadflies in this ever-changing governance landscape. This Article is the first to address the giant shadow that corporate gadflies cast on the corporate governance landscape in the United States. The Article makes three contributions to the literature. First, using a comprehensive dataset of all shareholder proposals submitted to the S&P 1500 companies from 2005 to 2018, it offers a detailed empirical account of both the growing power and influence that corporate gadflies wield over major corporate issues and of gadflies’ power to set governance agendas. Second, the Article uses the context of corporate gadflies to elucidate a key governance debate over the role of large institutional investors in corporate governance. Specifically, the Article underscores the potential concerns raised by the activity of corporate gadflies and questions the current deference of institutional investors to these gadflies regarding the submission of shareholder proposals. Finally, the Article proposes policy reforms aimed at reframing the current discourse on shareholder proposals and potentially sparking a new line of inquiry regarding the role of investors in corporate governance.

PEF의 법적환경과 그 성장에 따른 투자자보호 및 기업지배구조의 과제

PEF의 법적환경과 그 성장에 따른 투자자보호 및 기업지배구조의 과제

The Corporate Governance Obsession

Corporate governance has become a central concern of our time. For a variety of problems – from corruption and economic development to systemic risk and rising inequality – corporate governance reform has surfaced as a favored policy response. But while the costs and benefits of specific corporate governance practices have been the object of an extensive literature, the driving forces and general merits of this relentless emphasis on corporate governance have received much less attention. This Article explores the origins and scrutinizes the implications of the obsession with corporate governance as a solution to a constellation of economic and social ills. It suggests that the ascent of the corporate governance movement coincided with the growing distrust of government in the last decades. Ironically, one reaction was to treat the corporation as a metaphor for government, transposing to the corporate context the framework and remedies typical of government, such as “checks and balances” and democracy. The compromise character of the corporate governance agenda explains its political palatability and resilience: it appeals to progressives as a path for social and economic change in the face of political resistance to greater state intervention, while pleasing conservative forces as an acceptable concession to deflect growing governmental intrusion in private affairs. Corporate governance thus emerges as a midway solution between markets and government. Whether it is worth the candle, however, remains an open question. Any careful normative assessment of the corporate governance obsession must consider not only the effects of specific corporate governance practices but also the extent to which they crowd out alternative policy approaches. The Article then concludes by speculating on the future of the corporate governance obsession.

Putting ‘Dignity at Workplace’ on the ‘Corporate Governance’ Agenda

Dignity at workplace is increasingly on the agenda of many law-making bodies. While workplace bullying and harassment is not new, many researchers are now highlighting its enormity and negative consequences. There is a clarion call for laws to prevent bullying at workplace and some countries like Sweden have taken the lead with ordinances and laws on victimization at work. In an era where employees are considered the most valuable asset of an organization, the paper looks at what is bullying, mobbing and harassment along with its consequences on the individual and the organization. It explores various options available to the victim including legal options under the present laws. It argues that a work environment free from bullying and harassment is a prerequisite for developing a competitive advantage in a knowledge society. Finally it suggests that dignity at workplace is an important item to be put on the Corporate Governance agenda and organizations should proactively act to create an environment with zero tolerance for bullying.

Corporate Governance from a Global Perspective

This paper discusses on the development of corporate governance in selected countries, systems of corporate governance adopted, convergence of corporate governance practices towards internationally accepted practices and initiatives undertaken to ensure effective corporate governance practices. The efforts to instill good governance in developed countries have been undertaken much earlier compared to developing countries. In Malaysia, for example, the government has taken serious initiatives to put in place the required infrastructure for effective corporate governance practices. Finally, effective corporate governance agenda necessitate serious attention on enforcement, surveillance and advocacy. The globalization of financial markets over the past decade has created the need to harmonize corporate governance practices internationally.

Reputation risk: it is the board's ultimate responsibility

PurposeThe purpose of this paper is to outline the major sources of risk to a company's reputation that a board of directors should take responsibility for monitoring.Design/methodology/approachThe paper looks at numerous corporate scandals around the world in the last decade which have highlighted that many boards of directors were unaware of some deep‐seated problems in their companies. Thus, their lack of diligence contributed in part to their company's loss of reputation.FindingsThe paper finds that when a board of directors takes formal responsibility for the overall health of its company's reputation, two things generally happen. One is that the various board sub‐committees look for the impact on corporate reputation of their decisions. The other is that corporate reputation becomes a key performance indicator of the company's executive management team.Originality/valueThis paper acts as a “call to arms” to boards of directors to put corporate reputation on the formal corporate governance agenda. The significance of this “signal” is that it notifies all employees of the importance of creating and maintaining a good corporate reputation.

Does the criminal law have a role in the corporate setting?

The use of criminal law in the corporate setting has risen in the Corporate Governance agenda in recent months. Compelled by the prosecutions of six former Railtrack plc senior managers the paper discusses the relevance of criminal law as a disciplining force on directors and managers. The paper provides a detailed case study of Railtrack plc drawing out the major issues of relevance in applying the criminal law to a large complex company such as Railtrack plc.

Corporate Governance in Greece: Developments and Policy Implications

The upgrading of the Greek capital market and the effort to join other mature capital markets has posed corporate governance reform as a first priority. In addition, the 2004 Olympic Games put the Greek market in the international spotlight and will likely invite interest from foreign investors. More than ever, an efficient corporate governance framework is condition sine qua non for the competitive transformation of the capital market and the business world. At the same time the European Union (EU) faces both the pressure and challenge for harmonization of the laws and regulations and convergence of corporate governance systems, especially after the entrance of the new member states. The paper has two objectives: (i) to present the main aspects of corporate governance in Greece, contributing to the relevant growing body of literature, and (ii) to place the current corporate governance developments and trends in Greece within the international debate, especially in the light of the recent debate to improve and convergence corporate governance in EU. Firstly, I review the corporate governance debate and its implication at the EU level. Secondly, I describe the corporate governance framework in Greece in the light of the recent key reforms. Finally, I summarize the overall findings and proceed with some critical points and recommendations for the potential future direction of the corporate governance agenda in Greece.

Socially Responsible Investment and Corporate Social and Environmental Reporting in the UK: An Exploratory Study

This exploratory study examines the relations between corporate social and environmental reporting (CSR) and the socially responsible investment (SRI) sector. The evidence presented, based upon the informed opinions of 14 experts within the SRI field, suggests that the field of CSR is on the verge of a major change towards a substantial and sustained improvement in quality and quantity. The SRI sector is undergoing radical changes. A wider social movement has already led to exponential growth, as more people become concerned with how their money is invested. Moreover, the Pensions Review has widened this concern to institutional investment. Representing 35% of the stock market, the potential impact of this regulation is anticipated to be significant. One possible outcome could be a marked increase in the size and power of the SRI sector, improving their ability to successfully influence corporate behaviour. Success is likely to increase further as corporations begin to see a business case, as well as, or as opposed to a moral case, for acting in a more responsible manner. The Turnbull report on the combined codes of corporate governance is a significant factor influencing this. For the first time, reputational risk, and hence how companies manage environmental, ethical and social reputations, is on the core corporate governance agenda. A more powerful outcome would be an increased interest from mainstream fund managers in SRI modes of corporate assessment. Preliminary evidence suggests that this will create a greater demand for CSR, and greater legitimacy of CSR within the accounting orthodoxy.

Smaller business governance: Exploring accountability and enterprise from the margins

Smaller businesses now rank higher upon the corporate governance agenda. This agenda places their accountability and ‘enterprise’ particularly at issue. It is only put at issue because of just one possible problematization however. That problematization firstly assumes judicious accountability to be the crux of good governance with accounting at its hub. It secondly assumes that smaller businesses are the very seedbed of any ‘enterprise economy’, virtually irrespective of what form they take, or ‘enterprise’ they display. By then combining these assumptions together, this finally reproblematizes any relationship between accountability and ‘enterprise’, so that ‘de-regulation’ and decoupled accountability liberates smaller business ‘enterprise’ further. Others might question and challenge the very basis, as well as particular formulation, of this problematization however. A better grasp of the greater fluidity and complexity of smaller businesses would make the boundaries of their accountability and ‘enterprise’ more clear and leave their respective margins more suitably exposed. As a key potential instrument for that purpose managerial accounting research might then better inform the debate by specifically rendering these boundaries more visible while also identifying the precise scope for manoeuvre at/across their margins as well. To that end this paper uses certain enabling frameworks to construct and interpret the particular case of managerially accounting for a grown smaller business working across exactly those margins from the perspective of a ‘reflective practitioner’ acting as a field researcher for these purposes. As well as offering fresh insights into how far the boundaries of accountability and enterprise might legitimately stretch, this case calls for more critical thinking about how they might change.

The Corporate Governance Agenda

The name of Sir Adrian Cadbury has become synonymous with the development of corporate governance. His original involvement was chairing the UK Committee on the Financial Aspects of Corporate Governance in 1991, whose report has taken the name of Cadbury into the annals of the subject. Since then Sir Adrian has visited 28 countries, contributing massively to the raising of board level standards around the world. Now he reports that he has enjoyed this governance odyssey, but is “retiring from this particular field”. His contributions as a member of the Editorial Advisory Board of this journal have been very significant. Here he draws some conclusions on the state of corporate governance and likely developments in the future.

Financial Reporting, Private Disclosure and the Corporate Governance Role of Financial Institutions

This paper explores how large UK financial institutions (FIs) pursued a private corporate governance agenda with their portfolio companies. It also investigates the role of financial reporting in private and public corporate governance. The case financial institutions argued that the limited quality of public information, especially in financial reports, was a major constraint on their ability to act in fund management and corporate governance roles. However, the financial reporting cycle determined a private institutional and company meeting cycle and this created opportunities for private information collection and for governance influence by FIs. In addition, the perceived limitations of public governance mechanisms such as voting encouraged private governance approaches. As a result, the case financial institutions had the incentive and the means to improve the quality of their sources of corporate information and to obtain a competitive edge over other financial institutions and the market through their direct contact with companies. Despite the limitations of public information, the paper reveals how public disclosure in financial statements and the financial reporting cycle played a central role in corporate governance. Public sources of information were combined with private sources to create a financial institutional knowledge advantage. The institutions used this knowledge to diagnose problem areas in strategy, management quality, and the effectiveness of the board, and their impact on financial performance. The financial reporting cycle meant that the quasi insider financial institution had the access opportunity and the joint public/private insight to influence companies across a wide corporate governance agenda and in a range of corporate circumstances. The case institutions exploited these private access and knowledge advantages for investment purposes and for Cadbury style corporate governance purposes. Thus, the private governance process was critically dependent on the FI knowledge advantage, which in turn relied on both financial reports and private disclosure. This wide ranging governance behaviour by institutions corresponds to recommendations subsequently made by the Hampel report in 1998 concerning UK corporate governance. The paper ends by exploring how the private institutional and company meeting agenda can suggest new directions for financial reporting and public disclosure and how this can further improve public and private corporate governance.