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In this course we take an international perspective on corporate governance—a subject that is of ever increasing significance, because it is about the way power is exercised over corporate entities, whether they are public listed companies, family firms, or other types of organization. The governance of not-for-profit organizations has come under the governance spotlight, including charities, medical institutions, academic bodies, co-operatives, andgovernment entities.
Global financial problems a decade agosaw some major institutions in the US, the UK, and elsewhere in Europe threatened with collapse, government bail-out, or nationalization.This focused attention on the culture of those organizations and their directors’ attitude to risk. In many jurisdictions, changes were made to company law and corporate regulations, while some stock exchanges extended their corporate governance codes, increasing reporting requirements.
Other significant developments affecting the governance of organizations have occurred in recent years; for example:
~ growing concern about business ethics and some people’s conduct;
~ aggressive tax avoidance by international companies;
~ alleged excessive director remuneration;
~ supportingwhistle-blowing by aggrieved employees;
~ whether auditors should also be consultants to their audit clients;
~ corporate social responsibility and sustainability;
~ corporate attitudes to strategic risk;
~ the need for more women on boards, including ideas about quotas;
~ institutional investors in listed companieschallenging boarddecisions;
~ and an increasingly investigative and challenging media.
Creating companies’ ethical culture; determining corporate socialresponsibility; and integrating economic, social, and environmental performance, are increasingly recognized as part of boards’ corporate governance responsibilities.
Fortunately, I have been involved with corporate governance before the subject acquired its name, and have watched its dramatic evolution. Now I hope that I can share my experiences with you, and show you that this is one of the most fascinating and important topics in the modern world. Indeed, we shall be studying nothing less than the way that individuals, organizations, and states work together.
The textbook
Faced with a large textbook, many people, I know, skip the introduction to get on with the real material. If I can persuade you to look at the introduction, you will see that it emphasizes what the book is about, who it is for, and how it has developed. You will realize that this is a book designed for students at all levels, including those with business experience, and for practitioners operating at board level and their advisers.
Many of you will be using the textbook as part of a college course, and your course tutor will determine the readings, case studies, and projects to be used. Each chapter has a set of self-test questions to enable you to see whether you have grasped the essentials. Answers are included on this website.The book has also been designed for those preparing for professional examinations in accountancy, company secretarial, and directorship. Obviously, the examination syllabus will guide your reading and preparation. Further, the book can be used by those seeking training, development, or performance appraisal as a director on a company board or member of some other governing body.
The Online Resources
The students’ resources website has been designed to add additional information and support to the textbook. Since the subject continues to evolve rapidly, it is also a vehicle for keeping readers up to date. The website has the following features:
1. Additional information on case studies
This material will point you to other sources and enable you to make a more detailed analysis of each case.Many of the cases are relatively short, high-lighting only the crucial issues.However, since the first edition of this book was published, over a decade ago, companies, regulators, and professional commentators regularly place a great deal of relevant information on the internet. ‘Corporate governance’ is now one of the highest sets of references on Google.
This information can be an enormous help in collecting the information you need for a sound case analysis. Indeed, you are likely to learn a lot from these sources. Companies listed on stock markets around the world, for example, now publish their corporate governance policies, details of the executive and independent directors, their detailed financial reports and auditor’s report, and a strategic report.
I strongly recommend that you do some internet research on case companies and their situations before attempting a case analysis and reaching your conclusions and recommendations.
2. Useful website addresses
The internet has a great wealth of material relevant to your studies.Academic papers, official reports, commentaries on new legislation and regulations, and company websites all provide valuable information and insights.Each chapter has a list of further reading including relevant websites. However, some www addresses are long and complex;one can easily make a mistake copying them. So, this folder includes every website address mentioned in each chapter and a few more, to provide easy access by simply dragging or ‘cutting and pasting’.
3. Links to corporate governance codes
These are the web addresses of the material in Appendix 1, to enable you to cut/paste from this file, avoiding the inevitable problems in copying long, complex www addresses.
4. Access to additional resources
This section provides access to some of the latest developments in principles, polices, and practices through academic and professional journals.It also links to some videos of corporate governance lectures.The book is supported by a blog at: http://corporategovernanceoup.wordpress.com. Jointly edited by Professor Christine Mallin (author of Corporate Governance, Oxford University Press, 6th edition, 2018) and me, the blog provides material on recent developments and new thinking in the field.
5. Answers to end-of-chapter questions
Thequestions at the end of each chapter are intended to be give you an opportunity to test whether you have really grasped some of the salient features in the chapter. The answers are typically brief: they are not intended to be exam-style responses.If you find any difficulty, please refer back to the textbook.
Good luck with your studies. I hope you find corporate governance as challenging, stimulating, and worthwhile as I do.
Bob Tricker
March 2019