Excellent article by Andrew Canter of FutureGrowth on ensuring governance standards and practices are principled, robust and sustainable — so that they don’t impair the work of the perfectible but serve to emasculate the corruptible.
Here are a few quotes:
“We have learned that environmental failures, social mismanagement or poor governance can destroy companies. Although investors often rely on laws, codes and watchdogs (such as regulators, auditors and ratings agents) to give some comfort, “bad actors” regularly break the rules in the pursuit of personal gain.”
“…. when business managers are charged with looking after others’ interests, there is potential for conflict between what is good for the agent versus what might be best for their constituent investors. This is the well-known “agency problem” that must be managed with rules, reporting, contracts, oversight and culpability.”
“The belief that regulators, ratings agents, exchanges or others are overseeing the governance of companies — or that the well-intentioned King Code serves to protect investors — is simply untrue.”
Read the full article here.