Corporate Governance

Good corporate governance requires diversity

A hallmark of our era of disruption, populism and apparent de-globalisation is the erosion of trust in organisations and institutional systems. Trust is gained through better governance, which in turn is built on transparency, accountability and openness to diversity.

It is no coincidence that both Singapore and the UK issued new codes of corporate governance this year. Reinforcing systems of […]

Who stays longer, male or female CEOs?

Only 5 per cent of major North American firms had a female CEO as of January 2018. (Catalyst)

Clearly women are underrepresented at the top level of corporations, but the reasons for this are less clear. In a recent article, we investigate two different paths to the scarcity of female CEOs:

Women are appointed as CEO less often; and/or
Women are […]

Should companies reward CEOs for being lucky?

A puzzling feature of chief executive officer (CEO) compensation is “pay for luck”. Why are CEOs often rewarded when their firms perform well for reasons that are beyond their control? The dominant advice from academia is to do just the opposite: pay CEOs based on corporate outcomes they can substantially influence, which gives them incentives to make the good […]

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    The antitrust case against Android as viewed by a company insider

The antitrust case against Android as viewed by a company insider

In a recent Vox column, six antitrust consultants describe the European Commission’s case against Android, hailing it as a “milestone” of antitrust for the telecommunications industry (Caffarra et al., 2018).  In fact, it is more of a millstone than a milestone.

The colloquial definition of “millstone” is a “heavy burden”, and of course the case is a burden for Google. But it is […]

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    Board directors are supposed to have broad knowledge, but are they also narrow experts?

Board directors are supposed to have broad knowledge, but are they also narrow experts?

We all know about the experts who know so much about so little, and so little about so much. Scientists and artists are prime examples of specialised occupations whose members are suspected of being impractical in daily life.

Managers, on the other hand, are supposed to have broad and practical knowledge, and to be flexible in what they do. These […]

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    Two wrongs make a right: Why the trans-Atlantic antitrust rift is necessary in the global economy

Two wrongs make a right: Why the trans-Atlantic antitrust rift is necessary in the global economy

Less than week after the European Commission hit Google with a record £3.9 billion fine for abusing its dominant position in Android, Google’s quarterly earnings report came in: a noticeable dip in profits — down to $2.8 billion from the expected $7.8 billion—but a rise in share price—up almost 6 per cent.

Investors seemed to shrug off the giant fine […]

Gun control activism reaches the corporate boardroom

It was the first meeting of a publicly traded gun company following the Feb. 14 school shooting in Parkland, Fla., that left 17 dead and sparked a wave of anti-gun activism. And the shareholders of Sturm Ruger delivered a surprise.

A coalition of Catholic nuns backed by the giant asset management firm BlackRock pushed through a proposal – over management […]

Why CEOs misbehave

Sometimes CEOs misbehave. This misbehaviour has terrible consequences for the CEO, the organisation and society, yet still – they do it. Recent estimates suggest that fraud, a specific type of wrongdoing, results in a loss of 5 per cent of sales for a typical company every year and a global loss of about $3.7 trillion. With such clear consequences, […]

How the WPP board bungled Martin Sorrell’s departure

At first sight, Martin Sorrel’s departure from Wire and Plastic Products (WPP) — the company he founded and grew into an industry-changing and defining global force — underlines the importance and significance of independent-minded supervision of executive boards by non-executive directors. To many it appeared that the WPP board behaved impeccably when they appointed external legal advisors to investigate […]

Facebook’s light approach to corporate governance

Amongst the regular challenges of modern governance are the corporate scandals. These have affected almost every business sector, most recently of course the so-called disruptive Big Tech companies. It seems none of these social media technology companies are exempt from scandal. Google have been accused of abusing the dominance of its Android smart phone operating system and Apple were […]

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    What do business executives think about distributive justice?

What do business executives think about distributive justice?

This is the story of two cups of coffee, or at least that is where the story begins. The first, between me, Sandy Pepper, a Professor of Practice in the Department of Management at LSE, and Dr Susanne Burri of the Department of Philosophy, Logic & Scientific Discovery, took place in March 2016 in the Lundenwic coffee shop on […]

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    Unpicking complex incentive mechanisms that reward top managers handsomely

Unpicking complex incentive mechanisms that reward top managers handsomely

One distinct feature of the rise in income inequality over recent decades is the surging incomes of the working rich, particularly the pay of a class of top managers. A popular view stresses the role of performance-related pay in generating this feature. According to this view, the pay of many top managers is high-powered (i.e., with incentives tied to firm […]

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    Financial crises, corporate scandals and blind spots: who is responsible?

Financial crises, corporate scandals and blind spots: who is responsible?

According to the U.S. Financial Crisis Inquiry Commission, the main causes of the financial crisis of 2007-2009 were failures of corporate governance and policy, including widespread failures in financial regulation and supervision, lack of transparency, poor preparation by the government, and systemic breakdown in accountability. The Commission concluded that the crisis was avoidable.

In their book This Time is Different: Eight Centuries of […]

Second-generation family CEOs: are they up to the task?

Family firms are the most prevalent type of firm in the world. This is especially true in emerging economies, where they account for over half of medium-sized firms in the manufacturing sector. In particular, dynastic family firms – that is, where the founding family owns a controlling share and have appointed a second-generation (or later) family member as the […]

The case for ending shareholder monopoly

The UK is about to stop shareholders monopolising votes for company boards, with worker voice. Currently, asset managers control most shareholder votes in public companies. They have systemic conflicts of interest, because shareholder votes can influence companies to buy asset managers’ financial products (e.g. defined contribution pensions). But now this is changing. One small step, following government consultation, is that the Financial […]

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    Developing a tool to understand corporate culture from the outside

Developing a tool to understand corporate culture from the outside

Since May 2016, we have led an academic research project to develop a new approach to measuring corporate culture. This research has produced the Unobtrusive Corporate Culture Analysis Tool (UCCAT).

UCCAT is a theoretically based and scientifically tested methodology for analysing and benchmarking corporate culture. Uniquely, rather than gathering employee interviews and questionnaires to assess culture, UCCAT analyses publicly available […]

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    Uber: How inappropriate comments can take on unforeseen significance

Uber: How inappropriate comments can take on unforeseen significance

The widely reported resignation of Uber board member, David Bonderman, following his words at an all-hands staff meeting in June 2017 offers an exemplary case of controversy in corporate ethics and culture.

I revisit the event to analyse how these remarks were treated as ethically accountable conduct, and how such conduct takes place and is seen to happen within workplace […]

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    Rupert Murdoch’s Sky bid: why Ofcom should review the deal

Rupert Murdoch’s Sky bid: why Ofcom should review the deal

In December 2016, Rupert Murdoch’s 21st Century Fox reached an agreement in principle to buy satellite broadcaster Sky. After Fox formally notified the European Commission of its bid on 3 March, Culture, Media and Sport Secretary Karen Bradley has said that she is ‘minded to’ refer the deal to Ofcom on the grounds of media plurality and commitment to broadcasting standards.

Karen Bradley will […]

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    How boards perform their dual role as supervisors and advisors of management

How boards perform their dual role as supervisors and advisors of management

The board of directors forms an integral part of a firm’s governance mechanisms. Yet, how boards perform their dual role of supervisor and advisor of corporate management is difficult to observe from outside of the company. To open this black box, we survey 130 non-executive directors in various emerging markets to obtain detailed information about the inner workings of […]

The elephant (and the donkey) in the boardroom

Firms governed by politically conservative boards of directors pay their CEOs more money than do firms with more liberal-leaning (the ideological left in the US) boards. That’s the conclusion of our new study on the impact of political ideology in the boardroom. We also find an ideological disparity in the degree to which directors weigh recent firm performance when deciding […]