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Corporate Governance Activism - Desirable Doctrine or Damaging Dogma?

By Arjuna Sittampalam.

The book summarises the current situation of corporate governance activism and offers a new perspective that has been controversial but welcomed by leading industry stalwarts who prior to reading the book subscribed to the status quo.

ABRIDGED INTRODUCTION

There are growing signs that activists are going too far and that corporate governance intervention has become a religion, with an addiction to dogma that adherents of all religions are prone to. Undoubtedly, corporate governance activism under the appropriate circumstances has a lot to be said in its favour, but this does not justify its proponents undertaking evangelism. There is a need for the elimination of emotion and for an examination of the underlying principles.

The guidelines and codes for institutional investors leave many unanswered questions concerning implementation. If these questions are not resolved, industry could suffer severely. It is understandable that corporate governance activism is propagated to solve one set of problems but the danger is that it might give rise to much deeper and more far-reaching problems. There could be seriously adverse effects on companies, capital markets and the credibility of fund managers amongst savers. The unanswered questions require a deeper analysis of the interaction between shareholders and companies, both collectively and individually on a company-by-company basis.

Intuitively, the idea of corporate governance activism can be appealing. Yet, intuition is not always reliable and in this case can lead to focusing on just one narrow aspect of the fund management industry and ignoring all its complexities which need to be studied as a whole.

It is important to discard preconceptions. Several important paradigms that are currently the bedrock of company formation and corporate governance need to be re-examined. Some of these are challenged in this book and it is hoped that readers will approach all issues with an open mind.

For the contents page of the book, click here.

For the foreword to the book, click here.

For press release on book’s launch, click here.

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