TRENDS AND REGULATORY DEVELOPMENTS IN CORPORATE GOVERNANCE
RC: In recent years, would you say that firms have responded positively to regulatory developments on corporate governance and are working hard to achieve compliance in this area?
Pryce: From what we have seen, the conversation surrounding corporate governance and compliance has certainly ramped up in recent years and firms are certainly paying more attention. There is little question of the need for firms to respond, particularly for those that are publicly listed. However, the questions that need to be addressed are how well does a business engage with its regulatory requirements not merely to be compliant, but to use these developments to drive a culture of corporate governance throughout the firm? It would be fair to say in parts of the world, for example the US and Australia, the requirement for regulatory compliance is now almost overbearing, and engenders firms to believe that legal compliance will equate to corporate governance.
Kotz: I believe that many firms have responded positively to corporate governance developments, whether required to do by regulations promulgated as a result of the financial crisis or whether by instituting new or revised best practices.
RC: In your opinion, what constitutes ‘good governance’? What advice can you give to companies on making this concept a reality throughout their organisation?
Pryce: ’Good governance’ is not just about ticking the boxes. It is about the attitude the company and its board bring to the table when addressing governance. There have been many articles written on a company’s ethics being set by the board and CEO. Every company needs to form a cohesive understanding of what they want to achieve from governance and ensure it is communicated effectively throughout the organisation. A good culture of risk management in all aspects of the business will invariably lead to good quality governance and compliance, thus reducing the burden of regulatory requirements. While this is best demonstrated with a top down approach, this should also create an environment where any risk or control issue is identified and reported upwards to the appropriate person.
Jul-Sep 2013 Issue
Berkeley Research Group, LLC