Publication: Does More Power for Shareholders Undermine Board Stewardship?
Loading...
Date
2011-01
ISSN
Published
2011-01
Author(s)
Editor(s)
Abstract
The level of shareholders' expertise and experience needs to be questioned as they wield greater clout and become more deeply involved in strategic issues that should be the board's purview. This misdirected involvement distracts shareholders from their principal and most important role: electing and overseeing boards. To play that role, shareholders must have the basic tools from soliciting proxies of holders of voting securities to having the ability to seek court relief for a company's oppressive conduct. One of the important principles of good governance is the empowerment of shareholders. Unless they are able and willing to hold boards to account, then there is little hope, short of tough and intrusive regulation, of ensuring that company management acts in anything other than their own narrow self-interest. But the question is: how far should shareholders go? Peter Dey's paper brings an important perspective of someone who is both committed to good governance and experienced as a corporate director. This report heralded a new era of increased attention to the responsibilities of Canadian boards as stewards of shareholder value. Internationally, the author has been associated with the International Corporate Governance Network (ICGN) for the last ten years and has been an active participant in the Global Corporate Governance Forum, serving as a chairman.
Link to Data Set
Citation
“World Bank. 2011. Does More Power for Shareholders Undermine Board Stewardship?. Private Sector Opinion; No. 20. © World Bank. http://hdl.handle.net/10986/11067 License: CC BY-NC-ND 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Uses and Limits of Conventional Corporate Governance Instruments : Analysis and Guidance for Reform - Part One(World Bank, Washington, DC, 2009-06)This private sector opinion seeks to demonstrate that while conventional governance mechanisms can be highly effective in many situations, they are not appropriate remedies in all contexts. In some cases, the prescribed medicine actually exacerbated the governance ailment that it was designed to cure. To illustrate, the rapid growth of executive compensation persisted and in some markets, accelerated after the introduction of individual executive pay disclosure. In the financial sector, the shift toward a board dominated by independent directors perceived by many to be key for effective monitoring of management ultimately proved to be its Achilles' heel as weak industry knowledge meant that non-executive directors were unable to pick up on warning signs of imprudent risk taking by management. This section will examine how the core set of corporate governance instruments comprising transparency, independent monitoring, economic incentives, shareholder rights, and financial liability has been applied to different issues and contexts. It will discuss the extent to which these mechanisms have been effective and analyze the limits of their application by surveying cases where they have failed to work as intended. In addition, it will set forth proposals to improve the use of specific tools and suggest how certain governance issues should be addressed.Publication Developing and Implementing Corporate Governance Codes(Washington, DC, 2008-12)In recent years, voluntary codes have been increasingly employed across the globe to drive corporate governance reform. These guidelines, which emanate from stock exchanges, securities commissions, investors and investor associations, and supra-national organizations, set forth "best practice" recommendations across a range of topics that listed companies, shareholders, and other relevant parties are encouraged but not obliged to follow. Today, corporate governance codes are found in over 70 countries. It is relatively straightforward to develop corporate governance codes. The challenge lies in ensuring their effective implementation and enforcement, as evidenced by the complaints heard in some countries that governance codes have not lived up to their promise to spur enduring improvements in corporate practices. The concerns voiced range from poorly written guidelines to inadequate levels of compliance by companies to "box-ticking" by investors. This opinion piece will begin with an examination of the principal uses and key design characteristics of a corporate governance code.Publication Uruguay : Report on the Observance of Standards and Codes (ROSC), Corporate Governance Country Assessment(Washington, DC, 2005-09)This report provides an assessment of Uruguay's corporate governance policy framework, enforcement, and compliance practices. It highlights recent improvements in corporate governance regulation, makes policy recommendations, and provides investors with a benchmark against which to measure corporate governance in Uruguay. The paper discusses Uruguay's recent advances in financial and economic stability have given rise to an adequate basis for capital markets deepening and growth. However, these initial advances were jeopardized by a series of defaulting securities issuers and the 2002 financial instability episode which led to a perception of high risk and unpredictability of capital markets. The report then identifies several key steps to take in order to set strong corporate governance efficiency in the state owned financial sector. These steps include: improving corporate information, particularly ownership disclosure, related party transactions procedures, and financial reporting; promoting effective and active boards of directors; strengthening institutions, including the securities regulator, and the companies registry; and modernizing securities markets by strengthening intermediation and related regulations.Publication Corporate Governance Country Assessment : Colombia(Washington, DC, 2003-08)This report assesses the corporate governance policy framework, enforcement and compliance practices in Colombia. The capital markets are small relative to the economy and trading volume is low equity trading totals about USD one million, as compared to USD one billion in fixed income trading. The corporate sector is largely owned and controlled by family groups and conglomerates. The challenge is to create an environment where medium-sized companies can raise capital in the market and help them make the transition from tightly-controlled family firms to public companies. While pension funds represent a large and rapidly growing source of funds, they are reluctant to invest in equities. It has been demonstrated across countries that capital market development correlates positively with the degree of shareholder protection and good corporate governance. Awareness of the importance of corporate governance issues is growing. Success stories of privatizations linked with good corporate governance highlight the importance of the issue. Colombia is an interesting example of the interplay between legal changes and voluntary initiatives based on the incentive to attract capital. It has put a minimum corporate governance disclosure regime in place for companies that wish to be eligible for pension fund investments. The report recommends (i) the adoption of a securities bill as proposed by the securities regulator supevalores; (ii) the adoption of International Accounting Standards (IAS) and International Standards on Auditing (ISA) and the creation of an independent audit oversight board; (iii) improved enforcement; (iii) enhanced monitoring of compliance with the code of good governance, for example by introducing a comply-or-explain requirement; and (iv) the creation of a director training organization.Publication Culture and Corporate Governance Principles in India : Reconcilable Clashes?(Washington, DC, 2011-01)The structures, institutions, and legal framework of corporate governance are developed and administered by individuals whose behaviors are shaped by cultural and personal concepts of hope, ambition, greed, fear, uncertainty, and hubris, as well as by the social ethos. A problem arises when these influences do not conform to the regulatory prescriptions of corporate governance. This private sector opinion explores the dynamics of culture and corporate governance in India by calling attention to three areas where the clashes are strongest: related-party transactions, the promoter's or large shareholder's actions, and the board's nominations, deliberations, and effectiveness.
Users also downloaded
Showing related downloaded files
Publication Guide to the Debt Management Performance Assessment Tool(Washington, DC, 2008-02-05)The purpose of this document is to provide guidance and supplemental information to assist with country assessments of debt management performance, using the Debt Management Performance Assessment (DeMPA) tool. The DeMPA is a methodology used for assessing public debt management performance through a comprehensive set of 15 performance indicators spanning the full range of government Debt Management (DeM) functions. It is based on the principles set out in the International Monetary Fund (IMF) and World Bank guidelines for public debt management, initially published in 2001 and updated in 2003. It is modeled after the Public Expenditure and Financial Accountability (PEFA) framework for performance measurement of public financial management. The DeMPA has been designed to be a user-friendly tool to undertake an assessment of the strengths and weaknesses in government DeM practices. This guide provides additional background and supporting information so that a no specialist in the area of debt management may undertake a country assessment effectively. The guide can be used by assessors in preparing for and undertaking an assessment. It is particularly useful for understanding the rationale for the inclusion of the indicators, the scoring methodology, and the list of supporting documents or evidence required, and the questions that could be asked for the assessment.Publication The Mexican Social Protection System in Health(World Bank, Washington DC, 2013-01)With a population of 113 million and a per-capita Gross Domestic Product, or GDP of US$10,064 (current U.S. dollars), Mexico is one of the largest and highest-income countries in Latin America and the Caribbean (LAC). The country has benefited from sustained economic growth during the last decade, which was temporarily interrupted by the financial and economic crisis. Real GDP is projected to grow 3.8 percent and 3.6 percent in 2012 and 2013, respectively (International Monetary Fund, or IMF 2012). Despite this growth, poverty in the country remains high; with half of the population living below the national poverty line. The country is also highly heterogeneous, with large socioeconomic differences across states and across urban and rural areas. In 2010, while the extreme poverty ratio in the Federal District and the states of Colima and Nuevo Leon was below 3 percent, in Chiapas, Guerrero, and Oaxaca it was 25 percent or higher. These large regional differences are also found in other indicators of well-being, such as years of schooling, housing conditions, and access to social services. This case study assesses key features and achievements of the Social Protection System in Health (Sistema de Proteccion Social en Salud) in Mexico, and particularly of its main pillar, Popular Health Insurance (Seguro Popular, PHI). It analyzes the contribution of this policy to the establishment and implementation of universal health coverage in Mexico. In 2003, with the reform of the General Health Law, the PHI was institutionalized as a subsidized health insurance scheme open to the population not covered by the social security schemes. Today, the PHI covers all of its intended affiliates, about 52 million peoplePublication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Europe and Central Asia Economic Update, Fall 2024: Better Education for Stronger Growth(Washington, DC: World Bank, 2024-10-17)Economic growth in Europe and Central Asia (ECA) is likely to moderate from 3.5 percent in 2023 to 3.3 percent this year. This is significantly weaker than the 4.1 percent average growth in 2000-19. Growth this year is driven by expansionary fiscal policies and strong private consumption. External demand is less favorable because of weak economic expansion in major trading partners, like the European Union. Growth is likely to slow further in 2025, mostly because of the easing of expansion in the Russian Federation and Turkiye. This Europe and Central Asia Economic Update calls for a major overhaul of education systems across the region, particularly higher education, to unleash the talent needed to reinvigorate growth and boost convergence with high-income countries. Universities in the region suffer from poor management, outdated curricula, and inadequate funding and infrastructure. A mismatch between graduates' skills and the skills employers are seeking leads to wasted potential and contributes to the region's brain drain. Reversing the decline in the quality of education will require prioritizing improvements in teacher training, updated curricula, and investment in educational infrastructure. In higher education, reforms are needed to consolidate university systems, integrate them with research centers, and provide reskilling opportunities for adult workers.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.