What is Corporate Governance For? Yale Governance Forum

by James Mc Ritchie for Corpgov.net , July 5th, 2011.

The second session of the second day of the Yale Governance Forum 2011 was held under Chatham House Rule. Panelists were announced in advance, so that is no secret, but under the rule those reporting must not attribute what was said to specific individuals on the panel or in the audience. Stephen Davis was the moderator. Kerstin Jorna, Bernadette Kelly and Gregory Lau were panelists.

What you’re getting here is largely my take-away, complete with all my own personal bias, rather than an accurate reflection of what actually was said.

Who is corporate governance meant to serve? We all know it is not a national affair but is international. We had a “that’s not what we intended moment” when a Chinese company refused to accept a vote by a shareowner that went against management. (I’ve heard of this(these?) instance(s?) several times. Anyone have a reference?)

As far as I am concerned, the panelists soon veered off the general topic of what corporate governance is for and went into specifics that I’m not really su report re how to under the Chatham House rule. One thread revolved around government supervision and financial reform, with recognition that managements had failed. As the same time, there were concerns about over-regulation. One example was that it apparently costs ten times as much to get a patent in Europe as it does in the US. The European Commission has a  Green paper on the EU corporate governance framework the is out for comment until July 22th.

Many issues were discussed: comply or explain, group think, diversity, renumeration risk, short-termism, churn, principle and agent relationships, employee input, enforcement, quotas vs flexibility.  The driving motive appears to be to restore public trust in the single motive, which in the US appears to be maximizing shareowner value. (continue reading… )

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