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Governance at a crossroads: A personal perspective

Governance at a crossroads: A personal perspective After 30 years of work in the field of corporate governance, I find myself reflecting on the origins of the idea and tracing the steps to where we are now. Much hard activist work has gone into furthering the ideals of corporate governance by so many who believed corporations could responsibly regulate themselves. After writing several books on the issue, submitting dozens of shareholder proposals and spending thousands on litigation, proxy issues and board campaigns, I am considering my work in an effort to see the way forward. Even when corporations fought every proposal to separate the chairman and CEO, or Sears spent millions of dollars to keep me off their board or the SEC issued no-action letters on proposals that were identical to those submitted in prior years, I kept pushing for greater corporate responsibility and self-regulation. Therefore, this moment after financial reform and Citizens United seems a good time to reflect upon the twilight of corporate governance and the failures of self-regulation – and where we go from here. This article examines 30 years of corporate self-regulation and its relationship to the recent economic crisis. If corporate governance is at a crossroads, what is needed to go forward? The business corporation has for some 30 years struggled with the challenge of regulating its own affairs and, thereby, liberating the unshackled genius of the capitalist system. Because the government has failed to define precisely the scope of the trustees’ responsibility with respect to portfolio companies and has signally declined to enforce the most blatant of fiduciary conflicts, a disincentive for responsible ownership has resulted. This has discouraged the conscientious and enabled disproportionate power for the ruthless. The struggle has, for the present, been lost as the various elements of corporate governance have failed effectively to make corporate power accountable to owners. In addition, as a result of government creation of investment funds and employee benefit plans, trustees whose authority can be derived from existing federal law now are the legal owners of controlling interests in the preponderance of publicly traded companies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Disclosure and Governance Springer Journals

Governance at a crossroads: A personal perspective

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References (26)

Publisher
Springer Journals
Copyright
Copyright © 2010 by Palgrave Macmillan, a division of Macmillan Publishers Ltd
Subject
Business and Management; Business and Management, general; Accounting/Auditing; Corporate Finance; Corporate Governance
ISSN
1741-3591
eISSN
1746-6539
DOI
10.1057/jdg.2010.23
Publisher site
See Article on Publisher Site

Abstract

After 30 years of work in the field of corporate governance, I find myself reflecting on the origins of the idea and tracing the steps to where we are now. Much hard activist work has gone into furthering the ideals of corporate governance by so many who believed corporations could responsibly regulate themselves. After writing several books on the issue, submitting dozens of shareholder proposals and spending thousands on litigation, proxy issues and board campaigns, I am considering my work in an effort to see the way forward. Even when corporations fought every proposal to separate the chairman and CEO, or Sears spent millions of dollars to keep me off their board or the SEC issued no-action letters on proposals that were identical to those submitted in prior years, I kept pushing for greater corporate responsibility and self-regulation. Therefore, this moment after financial reform and Citizens United seems a good time to reflect upon the twilight of corporate governance and the failures of self-regulation – and where we go from here. This article examines 30 years of corporate self-regulation and its relationship to the recent economic crisis. If corporate governance is at a crossroads, what is needed to go forward? The business corporation has for some 30 years struggled with the challenge of regulating its own affairs and, thereby, liberating the unshackled genius of the capitalist system. Because the government has failed to define precisely the scope of the trustees’ responsibility with respect to portfolio companies and has signally declined to enforce the most blatant of fiduciary conflicts, a disincentive for responsible ownership has resulted. This has discouraged the conscientious and enabled disproportionate power for the ruthless. The struggle has, for the present, been lost as the various elements of corporate governance have failed effectively to make corporate power accountable to owners. In addition, as a result of government creation of investment funds and employee benefit plans, trustees whose authority can be derived from existing federal law now are the legal owners of controlling interests in the preponderance of publicly traded companies.

Journal

International Journal of Disclosure and Governance – Springer Journals

Published: Oct 14, 2010

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