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[MUSIC PLAYING]That ought to be an easy question.It isn't.The Cadbury Code famously described corporate governance,
defined corporate governance.It's a system by which companies are directed and controlled.I know that sounds simple.But systems are never simple.Systems are interconnected thingsthat all impact on each other.And as a result of that, this is actually a very different thingto call a single field.
if I had my druthers, I'd go awayfrom the idea of corporate governance,because I think it embodies a whole series of things thatare interconnected, but that are difficult to lookat as a whole.As a result of that, a lot of peoplehave looked at parts of the fieldwithout looking at the whole field.For what it's worth, in the book,
I actually tried to look at the field in a structured fashion.It's one of the things I think this may answeryour problem about the book.It's one of the things I think distinguishes this bookfrom other books in the field.I've tried to take a structured approach to itby going through the sort of main principles
that effect corporate governance, that people talkabout in this corporate governance, and then lookat a variety of issues that are faced,breaking it down into components.What is the relationship between boards and management?What's the relationship between boards and companies?And the investors, what issues dothe investors have with each other as owners of the company?
How does that all relate to companiesThat would not have obvious shareholdersthat are in the stock market, things like that.Organizations that may be non-profit organizationor mutual organizations, we look a little bit at that,and then try to puzzle out what to do about issues that
have arisen through the course of those discussionsand where the agenda's going from here.I've worked for a long time as a business and financialjournalist, and I started meetingat a fairly young age people who weretop executives at companies in a variety of difference
countries.So I worked in the United States,and in Germany, and Switzerland, and in the UK.I've dealt with people from companiesin all different kinds of countries.And I started seeing something thatwas interesting that was happening,sort of on the fringe on it.The executives who talked about problems
that they were having with board of directors,shareholders who were saying that companies weren't doingwhat they thought the companies oughtto be doing, and worrying about how they could deal with this.And so there was a long-standing interest in this.And I started looking into mechanisms, the way
that people tried to control for abuse at the time in companies.And a lot of those mechanisms involvedreporting about the companies' affairs, making things public.And as a journalist, I was part of the chain of publication.
For a long time in the United States,the definition of corporate disclosurewas to disclose information to certain named newsorganizations, mine among them.And so we were vehicles in that.And I was wondering, what role werewe playing in the marketplace, place,in shaping people's views of things
and promoting fairness and honesty.And so it was deeply personally in that regard.And then, this was about early 2003 in the UK,I met the chairman of a FTSE 100 company at a social event.
Never met him before, didn't know him at all,and we got to talking about things.And the "Higgs Review of Corporate Governance"had just been published.I mentioned that I wrote a little bitabout corporate governance, and he was livid.He was so irritated and so angry about the situation
that it made me realize there was somethingvery fundamentally important to very senior peoplethat he would get so agitated at a social gatheringthat I thought this is something that I'vegot to study in greater detail.And so when I became an academic formally in 2005,
I thought this is direction I'm going to go with research.I'm going to find out more about that sense of whythis issue was one that irritated him so much.Why is it important to study corporations?
Corporations are big influence on the shape of society,on the way develop the economy, on the lives of the individualswho work for them.They're very formative influences.So we study corporations for very good reasons.And that's sort of taken for granted.That's why people go to business schools, after all, isn't it?
Why do people study governance?Well, because governance is the systemof keeping things together and working in the right path,sort of, whatever the rightness is that we're talking about.We talk about government all the time.And government is a form of governance.It's a form of governing those activities.
If you put the two of them together,corporations are large forces in society,and the ways in which they're directed and controlledmust, therefore, be important to the lives of lots of people.Now, it's not an easy thing to sort of get that
across in the context of normal business educationbecause a lot of people won't haverun into the top end of companies and the structuresthat they're doing.But nonetheless, it's something thatinfluences the decision-making at the top end of companies,and the roles of the company in the economy as a whole.
So therefore, it is important to study,even if it's most boring topic in management.It deals with things that you can't grab hold of,that you can't see.And so most of the things you end up talking about,you talk about them vaguely, rather than precisely,because the decisions are difficult.
Corporate governance is often reduced to questions of, say,executive pay, or the roles of women or minorities on boardsof directors, and what influence thathas on corporate performance.
And there are so many other factorsthat can come between the starting pointof those discussions and the final point of firm performancethat you're never quite sure that any of it's connected.You're never sure that any of this stuff works.Empirical studies in this area are divided.And so as a result of it, you end up
saying yes on the one hand, on the other hand,and that's almost the definition of boring.It is, however, precisely because corporationsare such a big part of our lives and because the waythat they're directed and controlledare so influential over society that we really oughtto be taking a look at it.And we ought to be cutting through that aspect of it
to try to see it in its complexity.A lot of corporate governance literaturelooks back to the famous Berle Means book in 1932.And when I started studying corporate governance,I couldn't not read Berle Means, so I got a copy of the book
and read it.And I was stunned, because it wasn'tat all what I was excepting.So I guess that was an inspiration.They were looking at it from the pointof view of what happened to the crash, thatcaused the crash in 1929, which had ramificationsthough global economy.What happened?
And they identified a fundamental problem,they thought, in American corporations,that the control of corporation had become separatedfrom the ownership of it, that owners were dispersedand didn't have the information necessary to judge whatbusiness decisions to take.
So they hired managers to run the business.And that insight was a fairly fundamental one,that of course, people wouldn't treatit like as though it was their own money,but it was somebody else's money that they were spending.And that's very different from the waythat companies were run, say, in the 19th century
when most of them were owner-operatorsof companies, even those that had stock market listings.And there weren't very many, because there weren'tvery many stock markets.By the 1920s, that had changed.There was this proliferation of companieson the stock market with ownershipthat was widely dispersed.And they looked at that and said there's something fundamentally
wrong here.Owners aren't looking after their investments.That theme has been running through in the backgroundmost of the discussions about business managementand business administration since the 1930s.So they're going to be an important influence.But they're also looking at a narrow case.They were looking at American companies.
I mean, looking at American companies in the 1930s,in the 1920s.And a lot of things have changed since then,become more complex.One thing is that we've had the rise of institution investorsaround the world, particularly in the United States,that has meant that ownership has become more concentrated.
Rather that it being private individuals holdingsmall number of shares, it's large institutions thathold medium-sized groups of shares,and therefore, can influence to a greater extentthe judgment of the managers.Then you had in the 1970s the practiceof rather lazy management, in the United States
in particular.And again, most of the literaturecomes from the United States.You saw this happening in the form of companiesthat had grown into conglomerateswhere it worked against the principlesof institutional investment.Institutional investment eliminates riskby creating a diverse portfolio of investments,
but conglomerates are also creating a diverse portfolioof investments to reduce the riskof any individual component.That's a redundant exercise.So in the 1970s, we saw quite a lot attempts by companiesto resist efforts by shareholdersto hold them accountable for profitability in the enterprise
because it was comfortable for the managersto sit over large corporations.That led to a phenomenon that I supposetook us into the work of Michael Jensen, who'sjust one of the biggest figures in the corporate governancelandscape.
Jensen working with Leland Meckling,or with Eugene From a bit later, talked about this emphasison the separation of ownership and control,and tried to identify ways that we could overcome that.We could align the interests of shareholdersand corporate managers, so that it wouldn't be lazy,
and it would strive for shareholder value.That set a whole new route, the shareholder value orientationthrough the 1980s into the 1990s into 2000 spreadaround the world.It wasn't just the US alone.I worked for a while in Germany, as I mentioned.And in Germany, while I was there,people talked a lot about the sort of stakeholder orientation
in German firms, and how they manage for a wider rangeof people than shareholders.But I was there while they were switching over,becoming much more conscious of shareholder value.And that was an interesting phenomenonto watch the change in mentality among senior peopleas they were doing that.And I thought there's something else going on here.
Yes, there's something else.Come to the end of the 2000s, we startedseeing flaws in that model.The approach that Jensen was recommendingwas pointing us in the direction of doing thingslike making sure that managers of a business
had the same interest as shareholdersby holding large quantities of stock optionsor other forms of equity, which then, because things that couldbe manipulated by the people who were giving themand cause another round of corporate excess,led to very high levels of executive pay,relative to other measures.
Were they creating value to justify that?You can argue that both ways.The empirical studies are very mixed.But there was something interestingthat was going on there, I felt, thatwas the separation of the managersof the business from the products they were making.
A lot of companies were originallyset up for the sake of commercializing a reallyinteresting product idea.And suddenly, the purpose of business hadn't become that.It was to create capital gains and dividend flows.And that change in corporate purposewas something I found really interesting.And so we see a number of other authors
begin to climb on to this thing, saying whatis it that's going on here.Are boards really working for shareholder value?Are boards not supposed to be working for shareholder value,but something else?And then people started looking at other things,saying, well, what do boards do, actually?This is where Andrew [INAUDIBLE] work comes in,Terry McNulty's work.
They examined boards of directors.What do they do about strategy?Because we're putting boards in charge of running the company,we ought to ask them what to do about strategy.So there was a series of examinations in that regard.They tried to open up the board of directors to examination,rather than trying to do some sort of predictive modelbased on economic principles that
would allow us to judge whether we'dget higher or lower performance from a company.We started to look at what happens inside a company.It was that going inside that hit on the thingsthat I had seen as a journalist working in the field that beganto make me think there's something else here,something more important to be looked at than just simply
the putative cause and effect relationships,especially when you're dealing with a complex systemwhere cause and effect is really difficult to track.I think in some ways, the research agenda has moved on.There are a lot of things that people are researching that are
the old stories, in effect.Is there a link between executive pay and performance?And we know quite a lot about that.It will change over time, perhaps,and we need to keep track of it.But it's less exciting than it waswhen we were trying to find out how these things worked
to begin with.I think to some extent the agenda isshifting more to the government side than the corporate side.How do we govern this system?We have a regulatory environment thathas tried to create something that will keep corporations
in line.But what does in line mean?That's itself a research question.What's the role of public policy in this arena?When corporations are global entities,what are the jurisdiction issue thatarise when companies don't reside just in one place?
Is there a way of creating a system that accommodatesthis kind of global enterprise?Are there things that corporations can do internallythat can recognize this and do something else in absenceof a governmental approach?
So codes of corporate governance havebeen a phenomenon since 1992 when the Cadbury Code waspublished, and it propagated around the world,and has even been copied to some extent in the United States.That notion of a code of conduct,how do codes interact with the way people work?
How does that then reflect back in how people judgewhat the right thing to do is?So curiously, that one side is a very macro-research agendathat I think is fascinating of the interfacebetween regulation and the regulatory environment
and corporations at a governmental andsuper-governmental level.And on the other hand, the very micro one,which is how do individuals working in companies, in assetmanagement firms that own the shares of the companies,
how do they make choices about what the right thing to do is?When I was working in business-- Iwas in business between my time as a journalist and the timeI became an academic-- I was doing some work in the investor
relations field.And I came across an asset management company,a very large shareholder, that is, in companies,and I met the fellow who was their corporate governanceofficer.His job was to vote the shares at the annual meeting
of the companies in which this firm invested.Now, the firm had multiple different fundsthat it ran with multiple different fund managers.And I thought, you know, this is interesting.How does a person vote the sharesin the interests of the owner of the shares, when
the owner of the shares is somebodyelse, albeit in the same firm?But it's not just one person.It's multiple people.Do they take a vote of the fund managers themselves?So I asked him about it.He said, no, no.That's not the way it works.I vote the shares.I said, well, I'd like to come and talk to you about howyou make that decision.He said, well, I don't have an office at the firm.
I work from home three days a week.And I thought this is disconnect here.There's something interesting.And I've heard from a number of corporationsthat they face the same kinds of difficulties.They go in to see the fund managers of the funds thatown their shares, and they get adviceabout what the fund thinks about the current direction
of strategy or about the policy towards remuneration,or some other aspect of the business.They get a sense of where the fund manager thinksthe company should go, and then find that the shares are votedthe opposite way at the annual meeting from what they thoughtthey had understood from the fund managers.Now, that's an interesting puzzle all by itself.
How do fund managers deal with this?One case, it may not be generalizable.It may not even be common.But it suggests that there is somethingthat is fundamentally different from the way we thinkabout it in this broader model.
And so that's one of the cases wherewe start looking at that aspect of the problem,the relationship between owners and the boards of directors.There are other kinds of issues, cases similar to this.There's a famous case in India that
came up with a company called Satyam,which is Sanskrit for truth.Tried to change its board of directors.This was '08, I think, 2008, 2009.Tried to change the board of directors.They had sort of a model board, almost
built on the same principles of the Cadbury codeand the corporate governance that applied in the UKat the time of outside directors, whowere knowledgeable people, who were experts in their field.There were a couple of very sophisticated professorsfrom US universities on the board.There were other people from businesses outside it.
And there was a large shareholderin the form of the promotion of the company,as the Indians like to call it, who was chairman,and in charge of it.He tried to change the board of directorsbecause he wanted to acquire a couple of companies, companiesthat happened to be owned by his children.
These transactions would have transferreda lot of cash of the company out of the companyinto their hands of the family.And the other directors objected to it.So he tried to change them.The director's fought it, and finally resigned,which set off a kind of inquiry-- also ruined
the share price of the company for a while.It turned out that there had beensystematic fraud going on in that companyfor a couple of years.And apparently, what was happeningwas that the founder of the companywas trying to get as much cash out of the businessas he possibly could before someone discovered the problem.
The company exploded, imploded a few weeks after this.It was a fascinating story.And you saw how the very best mechanismsthat we had put in place for corporate governancefailed to prevent a catastrophic disaster.And that's curious.
That's interesting.And that suggests that some of the mechanisms that we'veseen as being the solutions to problemsin corporate governance, or ones thatmay have limited applicability, shall we say,may not work at all.
There are some things I think that peoplewould identify as being fairly common, I suppose.What's the level of executive pay?And are people trying to steal it from us?And is there fraud?And is there some way to prevent catastrophic failure?How can we use the diversity of a board of directors
to bring in diverse ideas?That is, is there a relationship between board composition,whether there are women on the board,or ethnic minorities, or whatever,is that a good proxy measurement for dowe have the right skills?Do we have the right knowledge on the board?Those are all, I suppose, fairly common issues.
But inside companies, a lot of the decision-makingis specific, rather than common.The problems of companies are very often strategic problems.And strategy has been teaching us for a long, long timethat companies need to be different from each other, notthe same.So one of the puzzles is if we follow
common practices in the corporate governance,how are we going to get differential performanceas an economic entity?And so therefore, a lot of what I think is worth looking at,worth looking at quite seriously from a research point of view,but also worth thinking about as a corporation,
is what kinds of things are specific to this organizationand make it different from that organization?How do practices, therefore boards of directors,need to change over time?You need to change, perhaps, with the lifecycle of the company.Is this company a mature business?Does it need something different from a start up business?
Does a company that's involved in the mining industryneed something different by way a governance approach to onethat's a newly listed technology firm thatmay die in three years time?Is it one that has most of its thingsinternally, that can control most of its internal processes
against a company that sees its value chain as being onethat's fragmented and scattered around,and it works through an ecosystem of company,rather than through the monolith of a corporation thatdoes everything?And these kinds of issues are morespecific to the individual company's settingthen they are to a system of corporate governance
that would apply across all companies.The stories that we know about in 2014look a lot like the stories we'veknown about for some time, it seems to me.The response, however, to a variety of other challenges
that the world faces are going to raisenew kinds of issues and problems for us to think about.Let's take a look at what's happenedin 2014 that's outside the scope of normal scopeof boring old corporate governance,and then try to swing it back in again.Biggest stories right now are disruption in the Middle East.
How do we deal with quasi-state terrorism?How do companies then deal with the situationsthat result from that?This is something we haven't dealt with before ever.And your boards of directors and going to facing this.Investment firms and investing companies
are going to have to take a view of the risks associatedwith companies that participate in or are unable to participatein normal business activity in the Middle Eastin view of the rise of a quasi-state terrorisein the form of Islamic state.
Some things going to happen there.I don't what it is, exactly.But we're going to have to find new ways of making decisions,new ways of guiding, new ways of decidingwhat level of risk we're going to take,and what level we're not going to take.That's an interesting puzzle.Russia, Ukraine, are we headed back
into a problem akin to the Cold War,or is it something very different?Wasn't very many years ago that Russian companieswere listing on London's stock exchangeand trying to capture a badge of qualityby associating themselves with the principles of UK
corporate governance.Now, that's a bit of a puzzle, and it's all in suspensionright now.But how are Russian business going to work?How are business going to work thathave to deal with Russian companies under a situationwhere we have embargoes in place,where anti-fraud protection mechanisms are being enhanced
on part of governance in a variety of different counties,and where fraud seems to be one of the routesto circumvent even the controls that the Russian government istrying to place on companies?So these are problem areas.We don't have any answers for these things at all.
But they're interesting things that boards of directorsof companies are going to have to face,and the investors who invest in those sharesare going to have to factor into their risk calculations.That's two examples.We could go on.We could be really micro here.What's going to happen when Scotland votesnext week whether to be independent of the UK or not?
What happens to the UK code of corporate governanceif there's not a United Kingdom?Small matter, not particular important, not earthshattering, and we'll probably find a way through it,but there's going to be an interesting problem there.It's going to rethink the nature of governance.Leave the corporate aside.There's another thing that puzzling us right now.
What happens to the way that organizationsare governed that aren't corporations, thataren't the traditional, profit-making, stockmarket-listed entities?What do we do with government itself?How do we govern government?
The UK government in particular hasgone the route of modeling governmenton the corporate sector, or elementsof the corporate sector.It has incorporated in Whitehall,in government departments, the conceptof non-executive directors brought over
from the corporate sector to try to improvethe commercial processes.But it doesn't work quite the same way itdoes in the corporate sector.In fact, it works very differently.How well does that work?We don't really understand that yet.Is that simply a case of trying to adopt commercial mentality
into government departments?And how does that commercial mentalityadjust to some of the security challengeswe were just talking about?We don't know yet.Really interesting things to worry about.How does Parliament govern itself?Fascinating debate going on now about the Speaker
of the House trying to create a new Chief Executive to replacethe old Chief Clerk.This is a corporate structure.That board of the House of Commonshas non-executive directors modeledon the corporate approach.What role did they play?
And is that role at all like thatof a board of directors, which issort of the last port of call?And why should that take any precedenceover judgements of elected members of Parliament?But the Board of Management of the House of Commons
also has, to a limited extent, more limitedthan it used to have, oversight over MP's actionsthemselves, very problematic area,deeply interesting on a very micro scaleof not tremendous significance.So there are a variety of things.Let's blow it out macro again.
What do we do about the really big issuesthat are facing the world?How do companies respond to things like climate change?What decision processes do they put in place to deal with it?How do investors deal with these kinds of things?These don't look like traditional corporategovernance things.But fundamentally, they all come back
into the board of directors and the choicesthat directors have to make in steeringthe investments of the company towards the future.We don't know the answers to any of these things.We know the questions.
Teaching is a really interesting problem.I had students who are taking a master's programin corporate governance.They're all working full time in rolesthat have them engaged with very senior managersor with boards of directors at various different kinds
of enterprises.It's easy to teach corporate governance.You go walk in, and you start talking about things,and it immediately resonate back.And so you can pull out the complexity of the issuesand talk about the problems.And they'll see the sources of ambiguityand look for [INAUDIBLE].That's the simple side.
How do you deal with it when you don't have that kind of abilityto tap into the resources of the individuals?I think we're seeing a shift in the rolethat corporate governance plays in business education,generally.There are a lot of people now who
are incorporating elements of corporate governancein other programs of studies.Mainly, it's done as a bolt on.If you look at most strategy textbooks thathave been published in last five or six years,you'll see there's a chapter on corporate governance,because it's important, and we ought to do something.
And they all read the same way.I teach strategy.And I teach strategy with corporate governance.And I'm constantly sort of trying to integrate it,trying to show that issue of what'sthe purpose of the corporation, the issue of how
does a board of directors make a decision about this,the question about the relationship of risk,and risk appetite, and controllingfor risk is, on the one hand, partof the economic equation of calculatingthe net present value of future cash flows from a project.
But that only deals with the risks you can quantify.It doesn't deal with the gut instinctthat people have that something's right or wrong.And so we try to bring this into the discussion, a very simple,but strategic decision-making.And it becomes deeply part of the process
of how do you set a strategy for an organization.You do the same with finance-oriented programs.Rather than just showing people how to calculate things,you can talk about risk appetite.And risk appetite moves into the notionof who's making the decision, whatvalues are associated with that, and what's
the purpose of the organization that'smasked by the assumptions about the net present valuecalculations, and what you've included in that,and what you've excluded.What managerial choices have led to that?Is there something that's being hidden in that?So you can get a kind of critical management studiesflip on very simple things of finance calculations
by using corporate governance.And the nature of the decision-making processis the vehicle to do that, so lots of ways.I wrote Corporate Governance, Principles and Issues largely
as a way of trying to organize all the disparate thingsthat I'd seen.Corporate governance is a field that'swritten about by people in an extraordinary rangeof disciplines.Accountants write about corporate governance.Finance scholars write about it.Economists write about it.
Financial economists write about it.Lawyers write about it.Management people write about it.I've even seen some stuff that's being done by marketing people.Marketing people writing about corporate governance?Well, the purpose behind it, they say,is if the value of the company is the net present valueof future customer relationships,
then of course, it's marketing.You could stretch that one.I think it is deeply and fundamentally partof the strategy-making process.And so I see it as a function of strategic managementand approach it from that strategic management aim.But it's also written about in group dynamics and grouppsychology.
Corporate government subjects are alsodeeply steeped in the ethics debate, the notion of whatconstitutes business ethics.What's the basis of the decision-makingin ethical terms.And because of this, the literatureis just enormous and very widely based,and very difficult to see the wood for the trees.
A lot of books I've been looking at in corporate governancetend to focus on one side or anotherof this debates because of the orientation of the scholars.Other ones tend to treat it in a rather fragmented fashion,as though these things are unconnected to each other.What I tried to do was to integrate it
and to show through the book the range of topics thatwere of concern, and do it in a way thatshowed the connections between these different approaches.I did that through focusing first on principles,and looking at corporate governanceas a series of issues that arose.
Is this a question of directing the company for value creation,or is it to control for risk?And so that twin, value creation and risk,is fundamental to the work of boards.We're asking people who run major companies to decide
whether to step on the acceleratoror whether to hit the brakes.And we've got to get that balance right.If we think too hard about corporate governanceas a control mechanism, we'll spend all the timeon their brakes, and we won't get anywhere.If we accelerate too hard going into the turn,we'll spin out and crash.
And so we've got to control those things.We've got to keep those things in some kind of balance,but not a balance that weighs too heavily on the side of riskavoidance and risk compliance.There ought to be more to it at the top of companies.There ought to be more to it than the choices.There is more to it than the choicesthat fund managers are taking.
They're looking for value creationas much as they are for risk avoidance, more so.So I tired to capture those things,and then look at how do we deal with the problems thathave come up, because there have been problems.There have been catastrophic failures in companies.And the policy responses to catastrophic failureshas been to introduce law and regulation on the one side
and codes of practice on the other.So how do those work, and how do those differ by country?And so there's a bit of international perspectivein this, quite a bit of international perspectivelooking at corporate governance in different partsof the world, and how they were built upand how they relate to each other.A lot of them relate back to the practices that
were introduced in the UK in 1992and have followed on since them through the various revisionsof the UK code.So we try to trace those things though it.And when you get to that, you getto a set of common principles, not quite an orthodox viewof the way to run the company, but something that's
become fairly standard in large parts of the world,the use of non-executive directives,some independent of the board.Of separating the role of the chairman and chief executiveis now sort of commonplace, although the empirical studiesshow ambiguous results as to whether thisis good for risk avoidance or good for value creation.
And so out of that, then say, OK,how does that then influence the work thatgoes on inside of companies?And so the book is then structured to look firstat the roles of how managers relateto the boards of directors to whom they report.What is the tension there?
What is the overlap?What are the dividing lines between them?And then move from there to boards and their relationshipwith shareholders and what kinds of tensions exist there.And then we move on the relationshipbetween different kinds of shareholders.We often think of shareholders as beingthis block of ownership, and therefore, they
should control things.But they have very different interests.A hedge fund that's holding shares for three nanosecondsin high frequency trading mode is a rather different kindof shareholder from a pension fund thatmight hold it for 30 years.But a pension fund might hold it for 30 years,but has outsourced its fund management
to an asset management firm that trades on a two year time cycleis a rather different phenomenon again.And so the complexity of the relationshipbetween shareholders is one I thinkthat's been sorely underestimatedin most of the discussion of corporate governance.And I've tried to pull that out here.A look, also, then at the role of companies dealing
with other constituencies, constituencies otherthan shareholders.This is, broadly speaking, the corporate social responsibilityagenda, sometimes called sustainability.Then I look at situations there about how fardoes decision-making go, and what problems ariseif you start trying to do multiple purposes
for the company, rather than the single purpose and valuecreation for shareholders.And that raises a series of interesting issues.The book then turns to the governance of organizationsthat aren't listed companies.It looks at nonprofit companies thathave a peculiar dynamic when they're not after money,
so the value creation motivation disappears.Who do they work for?What's the purpose of an organization like that?And then what kind of mechanisms do you put in place?What kind of social relationshipsare necessary to make those things work?And how do the differ form the standard practicethat goes on in corporations.Look at mutuals.
Look at professional partnership and try to see how they work.And finally, the book leads on to a discussion of allthe old unsettled issues.Love those issues.I don't think we'll ever be settled, because Idon't think we can be settled.There are things that end up having
to go back to the board of directorsfor a decision of what this company, this organizationis going to do under these circumstances at this time.[MUSIC PLAYING]
Donald Nordberg Discusses Corporate Governance
View Segments Segment :
Dr. Donald Nordberg explains corporate governance as the systems by which companies are directed and controlled. He discusses the relationships between boards of directors, shareholders, business managers, and other constituencies. He also highlights some common and uncommon issues decision-makers face.
Dr. Donald Nordberg explains corporate governance as the systems by which companies are directed and controlled. He discusses the relationships between boards of directors, shareholders, business managers, and other constituencies. He also highlights some common and uncommon issues decision-makers face.