When was Corporate Governance founded? What is its history? How did it come about, and what need or purpose were you trying to address?
Corporate Governance (CorpGov.net) was founded in 1995 to provide news, commentary and a network for those interested in transforming an arcane subject, discussed at a snail’s pace in academia and by a few dozen practitioners, to a more practical discipline where knowledge is shared and put into practice by investors and corporations at much closer to the speed of light. It was a good time to shift from Bulletin Board Systems to the World Wide Web. By searching the web (pre-Google) every day, I could easily keep up with each new entry on the subject of “corporate governance.” Times have changed.
What is your professional background? Who else is involved with Corporate Governance ?
I had a fellowship with the National Institutes of Mental Health to study what organizational forms optimized productivity and well-being through input from various stakeholders. As a sociologist of knowledge, I also paid attention to how systems are created and legitimized. By the time I published Corporate Governance, I had decades of experience in management analysis, consulting, as an executive, regulator and legislative advocate, as well as being a director on several corporate boards. Although largely a one-person effort, the Corporate Governance site has greatly benefited from the work of contractors, collaborators and contributors.
What are the core values of your organization? What is your mission?
Our mission is to help shareholders enhance the production of wealth by acting as long-term shareowners. Engaged owners invest not just money, but ideas and actions. Core values include:
- Science, informed by the notion that shared paradigms are social constructs, many originating in myth. We can examine the unconscious interpretive process and reconstruct corporate governance systems based on increased self-awareness and the participation of engaged owners. As pragmatists, we are both active participants and detached observers, correcting course as we learn.
- Decentralized, self-governing democratic systems are more adaptive than centralized command and control systems and are more likely to be sustainable over time.
- Democracies depend on a widespread sense of relative economic well-being, fairness and opportunity derived not from absolute standards but from perceptions of relative advantage and deprivation. High levels of wealth inequality lead to either appropriation by the state and redistribution or control of the state by the rich and a hollowing out of democratic institutions. Moderation is key.
- Democracy within firms improves the quality of democracy in government by transforming shareowners and employees into better citizens through an enhanced sense of political efficacy, reduced alienation, and increased entrepreneurial spirit.
- Self-regulating systems are preferable to reliance on regulators. However, such systems require that stakeholders, such as shareowners, have adequate tools to police their investments.
- Ownership, like citizenship, comes with obligations. When companies fail, the common shareholder reaction is to complain loudly that ‘regulators’ failed to do their job. Yet, in the eyes of the law, shareholders are the primary regulators of companies through annual meetings, election of directors, appointment of auditors and the like. Failure is partly due to the assumption that shares are financial instruments that bring rewards but not obligations, like insured bank deposits. This is like thinking one is entitled to enjoy the benefits of citizenship without paying taxes.
- Shareowner activism should be framed positively. The ultimate objective is not to destroy and defeat but to create and improve.
- Our primary objective is to achieve practical improvements in company policy or behavior. Specific concrete objectives offer a more solid base for action than broad immeasurable objectives.
Who do you see as your main audience and how has that changed over time?
My audience is the “corporate governance industrial complex.” This includes everyone from companies (management, directors, employees, corporate secretaries, investor relations, internal auditors, etc.) and shareowners (individual, institutional and representational groups such as the Council of Institutional Investors, ICGN, Business Roundtable, and Chamber of Commerce) to financial markets (NYSE, NADQ, etc.), courts, laws, insurance companies, ratings services, the Depository Trust Company, employees, unions, regulators (SEC, SECIAC, FINRA, etc.), NGOs like the World Bank and advisors (proxy advisors, law firms, banks, accounting firms, etc.), extending to suppliers, customers, and the general public because their beliefs and actions feedback into corporate behavior.
Over time I have placed more emphasis on individual investors as the key to reshaping corporate governance. Individuals are the most fragmented but also the most imaginative, creative and alive. Without their involvement and vigilance, institutions lack the necessary incentives to look out for the interests of individuals. Regardless of how the law may treat them, corporations and institutional investors are not people. As Adam Smith said long ago, those managing other peoples’ money rarely watch over it with the same vigilance as when they watch over their own. Any movement for real change must tap into the human spirit.
Why the ads?
The ads help pay the cost of maintaining the site. In good years, they also pay some of my expenses to travel to conferences on corporate governance.
How do we contact you?
e-mail James McRitchie: firstname.lastname@example.org