Oversight of risk has become a significant issue in the corporate governance debate following the failure of traditional institutions. In the aftermath of the crisis, the International Corporate Governance Network developed the ICGN Corporate Risk Oversight Guidelines to help institutional investors assess how effectively the boards of their portfolio companies carry out their oversight function regarding financial and non-financial risk. The Guidelines reflect a consensus achieved during a year of discussions between technical committee members, the sounding board and contributors of comment letters, who represented various institutions and jurisdictions across the world. These debates have culminated in a document which discusses not only the board and company process of risk management and risk oversight, disclosures concerning financial and non-financial risks but also the investors' responsibilities in oversight and their communication with the companies. The purpose of this article is to present the Guidelines with a commentary linking it to the current debate and developments in the corporate world.
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For all its faults, the private business system has been, and should remain, a driver of innovation, a creator of wealth for all, a harbinger of economic freedom. We have seen and experienced in the former socialist countries of Eastern Europe the suffocating system of fear and scarcity that emerged when markets were eliminated and private business enterprises banned.The benefits of markets and private enterprises are again at risk, but this time not from leftist ideologues and agitators. Under the vicious, pervasive influence of financial markets, anchored in a self-serving neoliberal ideology, corporations of the “contemporary” kind, particularly in the financial sector, are turned into nests of greed and tools for the enrichment of speculators.This sort of economic arrangement, which came about over the last 20-30 years in so-called Anglo-Saxon countries and was adopted broadly in many parts of the world, has brought the international financial system within a hair’s breadth of total collapse1. It plays a key, but often overlooked, role in almost all business shenanigans. It drives management to take actions that are not in the long term interest of the corporation or of the society in which it operates.This type of corporation has grown over the years, abetted, even promoted, by institutional investors and governance champions.Although well intentioned, they failed to realize they were planting the seeds of destruction of the sort of managerial capitalism that served societies so well for so long.How have we come to this state of affairs with recurring crises, financial double-binds and easy willingness to inflict on citizens the pain of failed policies? The answer resides in the neo-liberalism that has dominated policy making since Reagan-Thatcher but with a renewed fervour after the fall of the Berlin wall in 1989, which left “free markets” neo- liberalism as the only ideology standing.If governments of threatened countries (the USA, several members of the European Community) do not bring about a return to some fairness and sanity in their business and financial world, they may well trigger unmanageable social unrest and an acute loss of legitimacy, which arealways the forerunners of political and social mayhem. The whole world would bear the economic costs of this nasty turn of events.For, people will not accept for long to serve as “bank fodder”, as guinea pigs for “financial innovations”, as patsies in the game of global finance.In our previous book, Black Markets and Business Blues, we traced the evolution of business enterprises over the course of the last thirty years. We showed how and why managerial capitalism was replaced by financial capitalism, a corrupted system which brought about repeated fiascos. Then, as a member (Allaire) of the Global Council on the Role of Business of the World Economic Forum, we made several rather radical recommendations to bring about change in this system, recommendations which were surprisingly well
尽管存在种种缺陷，私营企业体系一直是、也应该继续是创新的驱动力，是所有人财富的创造者，是经济自由的先兆。我们在东欧的前社会主义国家看到并经历了市场被取消和私人商业企业被禁止时出现的令人窒息的恐惧和匮乏制度。市场和私营企业的利益再次面临风险，但这次不是来自左翼理论家和鼓动者。在以自私自利的新自由主义意识形态为基础的金融市场的恶性、无处不在的影响下，“当代”类型的公司，尤其是金融部门的公司，变成了贪婪的巢穴和投机者发财的工具。这种经济安排在过去二三十年中出现在所谓的盎格鲁-撒克逊国家，并被世界上许多地方广泛采用，它使国际金融体系濒临全面崩溃。它在几乎所有的商业诡计中都扮演着关键的角色，但往往被忽视。它驱使管理层采取不符合公司或其所在社会长期利益的行动。这种类型的公司多年来一直在机构投资者和治理倡导者的怂恿甚至推动下成长。尽管出发点是好的，但他们没有意识到，他们正在播下破坏管理资本主义的种子，而管理资本主义长期以来一直为社会服务得很好。危机反复出现、金融双重约束以及让公民承受政策失败的痛苦，我们是如何沦落到这种地步的?答案在于新自由主义。自里根-撒切尔时代以来，新自由主义一直主导着政策制定，但在1989年柏林墙倒塌后，新自由主义重新燃起了热情，这使得“自由市场”的新自由主义成为唯一屹立不倒的意识形态。如果受到威胁的国家(美国，欧共体的几个成员国)的政府不能在他们的商业和金融世界中恢复一些公平和理智，他们很可能会引发难以控制的社会动荡和合法性的严重丧失，这总是政治和社会混乱的先兆。整个世界都将承受这一恶劣形势的经济代价。因为，人们不会长期接受充当“银行饲料”，充当“金融创新”的小白鼠，充当全球金融游戏中的替罪羊。在我们上一本书《黑市和商业忧郁》中，我们追溯了过去三十年商业企业的演变过程。我们展示了管理资本主义是如何以及为什么被金融资本主义取代的，金融资本主义是一个腐败的体系，它带来了一再的惨败。然后，作为世界经济论坛商业角色全球委员会(Global Council on Role of Business)的成员(Allaire)，我们提出了一些相当激进的建议来改变这一体系，这些建议出人意料地受到了一个由几位大型美国和国际公司的首席执行官以及大学学者组成的小组的欢迎。本书建立在这两个基础之上。可以说，它的目的是让读者对金融市场的构成内容感到不满，让读者接近金融分析师、投资者、投机基金、公司管理层和董事会之间的动态相互作用。只有对上市公司管理层所承受的压力有同理心的理解，才能理解为恢复商业和金融世界的理智而需要发生的变革的深度。
{"title":"A Capitalism of Owners: Policies for a Fair and Sane (Business) World","authors":"Yvan Allaire","doi":"10.2139/SSRN.1916277","DOIUrl":"https://doi.org/10.2139/SSRN.1916277","url":null,"abstract":"For all its faults, the private business system has been, and should remain, a driver of innovation, a creator of wealth for all, a harbinger of economic freedom. We have seen and experienced in the former socialist countries of Eastern Europe the suffocating system of fear and scarcity that emerged when markets were eliminated and private business enterprises banned.The benefits of markets and private enterprises are again at risk, but this time not from leftist ideologues and agitators. Under the vicious, pervasive influence of financial markets, anchored in a self-serving neoliberal ideology, corporations of the “contemporary” kind, particularly in the financial sector, are turned into nests of greed and tools for the enrichment of speculators.This sort of economic arrangement, which came about over the last 20-30 years in so-called Anglo-Saxon countries and was adopted broadly in many parts of the world, has brought the international financial system within a hair’s breadth of total collapse1. It plays a key, but often overlooked, role in almost all business shenanigans. It drives management to take actions that are not in the long term interest of the corporation or of the society in which it operates.This type of corporation has grown over the years, abetted, even promoted, by institutional investors and governance champions.Although well intentioned, they failed to realize they were planting the seeds of destruction of the sort of managerial capitalism that served societies so well for so long.How have we come to this state of affairs with recurring crises, financial double-binds and easy willingness to inflict on citizens the pain of failed policies? The answer resides in the neo-liberalism that has dominated policy making since Reagan-Thatcher but with a renewed fervour after the fall of the Berlin wall in 1989, which left “free markets” neo- liberalism as the only ideology standing.If governments of threatened countries (the USA, several members of the European Community) do not bring about a return to some fairness and sanity in their business and financial world, they may well trigger unmanageable social unrest and an acute loss of legitimacy, which arealways the forerunners of political and social mayhem. The whole world would bear the economic costs of this nasty turn of events.For, people will not accept for long to serve as “bank fodder”, as guinea pigs for “financial innovations”, as patsies in the game of global finance.In our previous book, Black Markets and Business Blues, we traced the evolution of business enterprises over the course of the last thirty years. We showed how and why managerial capitalism was replaced by financial capitalism, a corrupted system which brought about repeated fiascos. Then, as a member (Allaire) of the Global Council on the Role of Business of the World Economic Forum, we made several rather radical recommendations to bring about change in this system, recommendations which were surprisingly well ","PeriodicalId":437920,"journal":{"name":"Law & Society: Public Law - Corporations eJournal","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134230683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The debate of core competence was of little consequence in the Indian context so far. Economic reform and boom, had almost blindfolded companies from the benefits of constrained operations. Coupled with rising level of incomes levels and expenditure - India was synonym with growth. Till recently astounding the world with ambitious acquisitions, corporate India is now in a fix. Poor risk management is evident from the extent of unpreparedness to deal with the current crisis. Also with the sources of funds drying up - listless banks and departing foreign investors, it is time that companies revert back to basics. Not only in terms of type of activities to be performed but also the manner in which they are to be performed.
{"title":"Core Competence and Corporate India","authors":"V. Malhotra","doi":"10.2139/ssrn.1520606","DOIUrl":"https://doi.org/10.2139/ssrn.1520606","url":null,"abstract":"The debate of core competence was of little consequence in the Indian context so far. Economic reform and boom, had almost blindfolded companies from the benefits of constrained operations. Coupled with rising level of incomes levels and expenditure - India was synonym with growth. Till recently astounding the world with ambitious acquisitions, corporate India is now in a fix. Poor risk management is evident from the extent of unpreparedness to deal with the current crisis. Also with the sources of funds drying up - listless banks and departing foreign investors, it is time that companies revert back to basics. Not only in terms of type of activities to be performed but also the manner in which they are to be performed.","PeriodicalId":437920,"journal":{"name":"Law & Society: Public Law - Corporations eJournal","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114811685","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In Santa Fe Industries, Inc. v. Green, the Supreme Court refused to recognize an actionable claim under section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 thereunder for alleged breaches of fiduciary duty in connection with a corporate merger. The Santa Fe Court concluded that, absent "manipulation" or "deception," the statute and rule do not reach breaches of fiduciary duty. The Supreme Court's decision was widely regarded as sharply curtailing the scope of rule 10b-5.
The evolution of Santa Fe and its progeny in the federal and state courts can be seen as an experiment in American federalism. Prior to Santa Fe, it was widely felt that state corporation laws inadequately protected shareholders from overreaching by management. Indeed, the trend towards "flexible" and "modern" corporation statutes was frequently characterized as a "race to the bottom" that ignored all interests except management's. The remedies proposed for the perceived abuses were often some form of federal regulation. Both courts and commentators spoke of an emerging "federal corporation law."
This Article shall examine Santa Fe and its progeny from the preceding perspective. First, for historical purposes, it will describe the chartering states' "race for the bottom" in the pre-Santa Fe period. Second, the Article will turn to the Santa Fe line of cases in both the federal and state courts. As hopefully will be seen, the respective positions taken by the federal and state tribunals represent a surprising and delicate experiment in federalism.
在Santa Fe Industries, Inc.诉Green案中，最高法院拒绝承认根据1934年《证券交易法》第10(b)条和第10b-5条提出的在公司合并中涉嫌违反信义义务的可诉索赔。圣达菲法院的结论是，在没有“操纵”或“欺骗”的情况下，法规和规则不能构成违反信义义务的行为。人们普遍认为，最高法院的裁决大幅缩减了10b-5规则的适用范围。圣达菲案及其在联邦和州法院的演变可以被视为美国联邦制的一次实验。在圣达菲之前，人们普遍认为，州公司法不足以保护股东免受管理层的过度干预。事实上，趋向于“灵活”和“现代”公司章程的趋势经常被描述为一种“逐底竞争”，无视除管理层以外的所有利益。针对被认为存在的滥用行为提出的补救措施，往往是某种形式的联邦监管。法院和评论员都谈到了正在形成的“联邦公司法”。本文将从上述角度考察圣达菲及其后代。首先，出于历史目的，它将描述特许州在圣达菲之前的“底层竞争”。其次，该条将转向联邦和州法院的圣达菲系列案件。正如我们所希望看到的，联邦法院和州法院各自的立场代表了联邦制中令人惊讶和微妙的实验。
{"title":"Reappraisal of Santa Fe: Rule 10b-5 and the New Federalism","authors":"Ralph C. Ferrara, Marc I. Steinberg","doi":"10.2307/3311639","DOIUrl":"https://doi.org/10.2307/3311639","url":null,"abstract":"In <i>Santa Fe Industries, Inc. v. Green</i>, the Supreme Court refused to recognize an actionable claim under section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 thereunder for alleged breaches of fiduciary duty in connection with a corporate merger. The <i>Santa Fe</i> Court concluded that, absent \"manipulation\" or \"deception,\" the statute and rule do not reach breaches of fiduciary duty. The Supreme Court's decision was widely regarded as sharply curtailing the scope of rule 10b-5. <br><br>The evolution of <i>Santa Fe</i> and its progeny in the federal and state courts can be seen as an experiment in American federalism. Prior to <i>Santa Fe</i>, it was widely felt that state corporation laws inadequately protected shareholders from overreaching by management. Indeed, the trend towards \"flexible\" and \"modern\" corporation statutes was frequently characterized as a \"race to the bottom\" that ignored all interests except management's. The remedies proposed for the perceived abuses were often some form of federal regulation. Both courts and commentators spoke of an emerging \"federal corporation law.\" <br><br>This Article shall examine <i>Santa Fe</i> and its progeny from the preceding perspective. First, for historical purposes, it will describe the chartering states' \"race for the bottom\" in the pre-<i>Santa Fe</i> period. Second, the Article will turn to the <i>Santa Fe</i> line of cases in both the federal and state courts. As hopefully will be seen, the respective positions taken by the federal and state tribunals represent a surprising and delicate experiment in federalism.","PeriodicalId":437920,"journal":{"name":"Law & Society: Public Law - Corporations eJournal","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1980-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128289665","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article argues that EU competition policy may be becoming more lenient through social capture. Social capture is a process whereby the social environment of public officials consciously or inadvertently shapes their policy-relevant views in a direction that serves the regulated entities. Unlike in other areas of public policy, the social environment influencing competition officials is not formed by the actual regulated entities, i.e. highly heterogeneous big business, but rather by the competition practitioners advising and representing them. The practitioners work mainly for large corporate defendants, which leads to their community leaning strongly towards non-interventionism. Because of the following three channels of social influence, this worldview may become endorsed also by competition officials: First, the officials often socially identify with the community of practitioners. Second, the officials tend to perceive the practitioners as having higher status. And, third, many officials regularly interact and develop relationships with the practitioners. The risk of social capture needs to be taken seriously considering the major efforts of big business to make EU competition policy more lenient through other avenues such as lobbying and sponsored research. The article also discusses measures to address social capture, cautioning nevertheless that its causes may at the same time generate countervailing policy benefits.
{"title":"Social Capture of EU Competition Policy","authors":"J. Broulík","doi":"10.2139/ssrn.3487616","DOIUrl":"https://doi.org/10.2139/ssrn.3487616","url":null,"abstract":"This article argues that EU competition policy may be becoming more lenient through social capture. Social capture is a process whereby the social environment of public officials consciously or inadvertently shapes their policy-relevant views in a direction that serves the regulated entities. Unlike in other areas of public policy, the social environment influencing competition officials is not formed by the actual regulated entities, i.e. highly heterogeneous big business, but rather by the competition practitioners advising and representing them. The practitioners work mainly for large corporate defendants, which leads to their community leaning strongly towards non-interventionism. Because of the following three channels of social influence, this worldview may become endorsed also by competition officials: First, the officials often socially identify with the community of practitioners. Second, the officials tend to perceive the practitioners as having higher status. And, third, many officials regularly interact and develop relationships with the practitioners. The risk of social capture needs to be taken seriously considering the major efforts of big business to make EU competition policy more lenient through other avenues such as lobbying and sponsored research. The article also discusses measures to address social capture, cautioning nevertheless that its causes may at the same time generate countervailing policy benefits.","PeriodicalId":437920,"journal":{"name":"Law & Society: Public Law - Corporations eJournal","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115031881","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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