The Business Case for Corporate Governance

Front Cover
Ken Rushton
Cambridge University Press, Jul 31, 2008 - Business & Economics - 254 pages
1 Review
This book goes beyond the 'what and how' of corporate governance to explore the impact and benefits of good governance for companies and their investors. The contributors are leading market practitioners, investors, academics and consultants who offer their own views based on a wealth of experience. Topics covered include what makes for an effective board and is the unitary board sustainable? The contribution of governance to financial performance - is the research conclusive? Managing risk and reputation - how do boards ensure they are trusted by their shareholders? The benefits of market led standard setting -do US and EU regulatory initiatives threaten the traditional UK approach? The book looks to dispel the belief that governance is a burden on companies that adds little value by demonstrating the contribution it makes to board effectiveness and corporate performance.

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BENEFITS OF RESPONSIBLE CORPORATE ACTIVISM
A review by Phillip Taylor MBE, Richmond Green Chambers
This collection of thoughts from thirteen corporate contributors appeals to both lawyers, shareholders and those working in listed companies. As the blurb on the front says, it goes well beyond the ‘what and how’ of corporate governance, and it explores the impact and benefits of good governance for companies and their investors from the people who know what they are talking about.
The thirteen contributors are leading market practitioners, investors, academics and consultants who offer their own views based on a wealth of experience so the works is neither a handbook nor a primer on corporate governance.
Ken Rushton has included topics such as:
• what makes for an effective board, and whether the unitary board is sustainable;
• The contribution of governance to financial performance – is the research conclusive?
• Managing risk and reputation – how do boards ensure they are trusted by their shareholders?
• The benefits of market-led standard setting – do US and EU regulatory initiatives threaten the traditional UK approach?
The purpose in the collection is to dispel the belief that governance is a burden on companies that adds little value, by demonstrating the contribution it makes to board effectiveness and corporate performance, and is highly relevant at a time of acute economic downturn.
The thread running throughout the book is the challenge being faced by those within the system and those who invest in their own different ways. The work pre-dates the current economic downturn internationally, but I did find that chapters 9 (Regulatory trends and their impact on corporate governance) and 11 (Is the UK model working?) were the most important areas for me when I read the book through.
As the function of corporate governance widens to include people hitherto unused to company activities, each contributor gives a particular insight into roles, duties, sanctions and regulation, ending with the big question for which we might, currently, have a rather pessimistic response. Simon Lowe makes some observations on the Combined Code after we get through all his graphs:
Is it working? Yes.
Is it perfect? No.
Can shareholders do more? Yes.
Can regulators do much more? No.
Can boards do much more? Emphatically, yes.
And I rest my case here, too, having found these corporate analyses refreshing and thought-provoking in their content and presentation!
The Law Practitioner Series from Cambridge University Press have produced the business case well here before the onset of autumn 2008. The problem now is whether Lowe’s questions will be taken up seriously enough as they surely must: he answered them himself, fairly, when this work was published in 2008- but things have changed and the corporate governance landscape has probably now been altered forever.
So, Rushton and his contributors will still return to the five questions from Lowe … and only history will tell how we emerge from the current crisis, but do read all this beneficial advice first!
 

About the author (2008)

Ken Rushton is a former Director of Listing, Financial Services Authority and Company Secretary ICI.

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