There's more to corporate governance than governance

Annie Pye is one of those academics who pick a topic and won't let go. Back in 1988 she started interviewing directors of UK corporations, work that continued a decade later once the Cadbury Code had come to dominate UK board practice. Her team at the University of Exeter has been at it again. This is not just a random sample survey approach. In many cases they have been talking to the same senior people for decades. The latest version comes with a quantitative element, focusing on boardroom and executive pay, and well as profiles of board composition. Her work details how each major corporate scandal has led to increased regulation. Each cycle of boom and bust has been succeeded by wider, deeper and longer-lasting recessions. "Ever more regulation shows an increasing trust in a system of rules rather than in the people who run companies. If this pattern persists then perhaps the next step is global regulation which my research shows is neither feasible nor desirable," she notes. "In other areas very little has changed – the number of women on boards remains pitifully low and the relationship between Chief Executive and Chairman remains crucial and defines the effectiveness, or otherwise, of boards."

Non-executives: The report notes that regulatory changes may have sharpened the role of non-executive director, but they have "also exacerbated its paradoxes". Non-execs must be coaches and referees, support and challenge, and remain independent even as they share hopes and aspirations with the executive with whom they serve.

In this uncomfortable state of affairs, corporate governance still seems important, but the report concludes – as her previous work did – that codes and regulation may be necessary, but they aren't sufficient for board effectiveness. "There is more to corporate directing than corporate governance," the latest report concludes. "Responsibility for setting direction/strategy, risk management, leadership, corporate conduct, reward and incentives, reputation and performance remain key elements of a director's governance role."

That is, there's more to corporate governance than corporate governance.

Source document: The synopsis of the report is a 12-page pdf file.