Move aside, waffling academics. Econometric research released this week by the Association of British Insurers (ABI) is unequivocal: Good corporate governance is a driver of premium performance and higher stock prices over the long term, at least at UK plcs. In the past five years, well-governed UK companies posted 18% higher returns than those with poor governance, after adjusting for risk. Worst offenders—companies that breach governance guidelines every year—underperformed the average industry-adjusted return on assets by 3 to 5 percentage points a year. Plus, the long research time frame allowed ABI to unearth a find the equivalent of buried treasure: it takes two to three years after a company starts breaching until there is an impact on performance. Studies focusing on shorter timeframes may have missed the link. ABI statistics resolve the chicken-and-egg problem, too. They show better governance causing performance gains, and not the other way around. Expect Governance and Performance in Corporate Britain to help fortify institutional investors who see governance research as a profit enhancer and risk tool rather than a dreary cost center.
Brown Governance Releases Series of Governance Videos
In an effort to increase governance understanding, Brown Governance has created a series of brief videos, featuring David Brown, discussing a variety of governance related topics.
If you have a topic you'd like to see discussed, please contact us with your suggestion and we may use it in a future video.
Like many senior leaders, you may find that today's new rules have put governance in a kind of "black box."
Our Corporate Governance Seminars shine bright light into this "black box," to help you fully grasp its contents and guide your organization accordingly.
All Brown Governance Seminars qualify as continuing education for graduates of The Director's College!
On the basis of available evidence, the Steering Group concluded that “activist” hedge funds and private equity firms could help strengthen corporate governance practices by increasing the number of investors that have the incentive to make active and informed use of their shareholder rights. This may include demands for changes in management, the composition of the board, dividend policies, company strategy, company capital structure and acquisition plans. Such active and informed ownership is expected to stimulate the search for the best possible use of corporate assets and thereby contribute to better risk and resource allocation in the economy as a whole. Promoting efficient outcomes for actions taken by active and informed ownership is therefore likely to remain an important policy objective for the years to come. To this end, the Steering Group discussed the potential implications for some areas of the OECD Principles, notably: the efficiency of the market for corporate control (including takeover regulation), transparency requirements, the reliability of voting systems and the monitoring/management of conflicts of interest through the exercise of fiduciary duties by management and boards.. Read the full article here
Globe and Mail Report Gaps revealed in mandatory disclosure
JANET MCFARLAND of the Globe and Mail writes “Many Canadian companies are violating a new securities regulation that requires disclosure of their corporate governance standards, a recent review by regulators has concluded. Securities regulators in seven provinces adopted new guidelines in 2005 requiring companies to disclose how they adhere to nine fundamental governance guidelines. Obtain the full article here
The Top 10 Signs You Need to Turn Over Some Directors
10. Breakfast at Tim Horton’s qualifies for per diems
9. The boards spends half the meeting debating door prizes and napkin colours for the AGM.
8. The Directors know the CFO’s presentation so well they can lip sync it with their eyes closed
7. The snoring is so loud the police charge you with noise violations.
6. The invitation to your family reunion and the board meeting can be sent in the same envelope.
5. Disagreements are settled by arm wrestling.
4. The tension is so high that Shoppers Drug Mart has installed blood pressure meters beside every chair.
3. You turn on the TV and half of your board members are duking it out on Springer.
2. When you flip the channel the other half are crying on the Dr. Phil show.
1. The Board approves hiring the Chair’s 4 year old grandson as the compensation consultant.
Your board faces major challenges because of recent legislative changes: are you ready?
Last month, the Canadian Securities Administrators issued governance reforms in ICFR (Internal Control over Financial Reporting) and CD&A (Compensation Discussion and Analysis.) These changes, on top of the ever-expanding governance role of the corporate secretary and general counsel, will require more of you than ever before.
In response, Brown Governance has teamed up with Thomson Carswell and Compliance Partner to bring you some timely and practical information, help and tools.
There are 4,000 companies in Canada that must follow these new standards – but there are 400,000 organizations, from not-for-profits to hospitals, to public sector organizations, to privately-held firms, that will be expected to answer: “did you adopt these governance practices?” And, “If not, why not?”
At this forum you will:
Engage with David Brown, Canada 's leading thought leader and trainer in corporate governance
Be equipped to meet the latest CSA governance reforms in ICFR and CD&A
Experience a short demonstration of Compliance Partner TM a creative software solution
Enhance your strategic and administrative skills
Interact with your peers and discuss implications and solutions
This is not just another corporate secretaries forum! This is a timely event to help you respond quickly to new reforms. Are you ready?
Congratulations to Husky IMS, winners of the CSR Survey Contest.
In lieu of accepting the Video I-pod a donation of equal value has been made to The Leprosy Mission Canada .
Thank you to all who submitted entries, you will be receiving highlights of the findings as soon as they are compiled.
David Brown speaks with Compliance Week about Canada's approach to SOX
In Canada, A Different Approach To SOX
By Kathrine Schmidt — May 8, 2007
...Likewise, Brown says investors have largely been content. “[For] the vast majority, as long as they have clarity and they have transparent disclosure, they’ll be happy,” he says. “What was uncertain was where [Canada] would come down with regard to SEC changes. Investors appreciate the clarity. They have a clearer idea now what’s going to be shared.”
The full text of the article can be found in the pages of Compliance Week
Update: The CSR Survey is now closed, answers are being aggregated and the winner of the video i-Pod will be announced shortly, thank you to those who participated!
If you could gain hard fact-based intelligence about current corporate practices and trends in CSR, and have a chance to win a video i-Pod too, in exchange for less than 10 minutes of your time, would you?
Governments, communities, shareholders and investors, customers and employees are all expecting companies to conduct business in a fair and ethical way: the stakes in terms of competitive advantage and risk to corporate reputation are high. Responsible business strategy keeps an eye on shareholder wealth as well as stakeholder welfare: the two need not be at odds.
On completion, your name will be entered in a draw for a video i-Pod, and you will be sent the highlights of this international research:
Separating fact from fiction in the rapidly evolving and maturing world of corporate responsibility – find out what your peers and competitors are actually doing
Benchmark your CSR practices against 2007 current practices and trends of peers
Learn how the board of directors, and senior executive team, can add real value to CSR
Gain practical case study applications of what is working at leading firms
Atuqtuarvik moves on Nunavut banking system
Inuit company strikes deal with First Nations Bank of Canada
Nunavut's Atuqtuarvik Corp. took a big step towards the creation of a new banking system for Nunavut last month, with an agreement that will see them join forces with the Saskatchewan-based First Nations Bank of Canada.
Under the deal, Atuqtuarvik will become "a major shareholder" in the First Nations Bank. The two companies will then work on expanding the First Nations Bank into Nunavut.
November 23, 2006 - Barcelona – “Honour a person's word, even if he isn't necessarily able to keep his promises.”
According to Harvard Professor Michael Jensen , this is one of the basic aspects of integrity, a concept that, when applied to organisations, directly influences value creation.
BBC News – The US should rethink its regulation of firms and bosses to stay competitive, according to a group with close links to Treasury Secretary Henry Paulson.
Revising rules under the Sarbanes-Oxley Act would make US markets more attractive, the Committee on Capital Markets Regulation (CCMR) said.
December 7, 2006 – The California Attorney General's Office said Thursday that Hewlett-Packard will pay $14.5 million to settle civil charges related to the company's now infamous spy scandal.
OCEG ANNOUNCES GUIDE FOR USE IN AUDITS OF COMPLIANCE AND ETHICS PROGRAMS
NEW YORK, MAY 31, 2006 – The Open Compliance and Ethics Group (OCEG), a non-profit organization with a mission to help organizations align their governance, risk and compliance (GRC) management activities to drive business performance and promote integrity, announced today the release of an internal audit guide (The Guide) exposure draft.
The Canadian Securities Administrators (CSA) have done an about-face on SOX 404. After proposing that Canadian public companies adopt external audits of the effectiveness of internal controls (52-111), the country's 13 securities and governance regulators withdrew the entire proposal without warning in March. The CSA had been under considerable lobbying from both the corporate and accounting communities, and faced uncertainties as to the cost effectiveness of adopting 404 in small and mid-cap companies - which most Canadian firms are. The real reason behind the reversal: powerful Ontario Securities Commission David Brown, and ally, Alberta Securities Commission Steven Sibbold, both ended their tenures recently, the latter more noisily, and the rest of Canada's regulators (led by British Columbia and Quebec) had no stomach for more governance compliance costs.
The problem is: what now? Canadian CEO's and CFO's will have to certify as to the effectivenss of internal controls over financial reporting starting at the end of 2007. But what degree of due diligence will be required internally in order to defend these certifications? And what steps will Audit Committees and external auditors have to take as they rely on these certifications? Canada's legal and accounting professions have no idea ... but it should be interesting to see how the 404 vacuum is filled. Read the news release here.
Corporate and IT Governance a Necessary Evil, CIOs Say
The phrase “necessary evil” may not be the savviest way of describing it, but keeping a handle on IT governance will likely remain a key priority for CIOs in 2006. That was clear from the discussions at a recent Canadian CIO roundtable in Toronto sponsored by Brown Governance Inc., RIS and CIPS. At least three current models of IT governance were identified: a centralized, shared services model; a decentralized model, where responsibilities are delegated to business units; and a hybrid of the two.
According to David Brown, Executive Director an co-host of the event said, In a post-Enron world, enterprises are already aware of the challenges of weighing IT innovation with regulatory and legislative constraints. But, compared with the rest of the world, Canada is doing quite well when it comes to corporate governance. Canadian companies have done a particularly good job of integrating U.S.-style rules-based governance (including the Sarbanes-Oxley Act).
At the same time, he said, Canada still maintains a British style principles-based system of governance, which allows us some flexibility around corporate governance. "More and more it's accepted as the reality of doing business today. But there's still a sizable minority that thinks this is going to go away and is an unnecessary exercise in compliance." Read more in IT World Canada.
Call For Papers
Have you completed and written a quality, relevant piece of governance research or practical paper on any subject related to governance? Would you like to see it published? Brown Governance Inc. is seeking high-quality papers to publish and distribute via its website. Click here for further information, or contact us for more information.
We've updated with information on Corporate Responsibility and Competitive Advantage. Learn how Corporate Responsibility can bring value to your enterprise, as well as browse a global compilation of external resources.
Find out more about the National Awards in Governance here
Governments, communities, shareholders and investors, customers and employees are all expecting companies to conduct business in a fair and ethical way: the stakes in terms of competitive advantage and risk to corporate reputation are high. Responsible business strategy keeps an eye on shareholder wealth as well as stakeholder welfare: the two need not be at odds. 
The Canadian Securities Administrators (CSA) have 
Have you completed and written a quality, relevant piece of governance research or practical paper on any subject related to governance? Would you like to see it published? Brown Governance Inc. is seeking high-quality papers to publish and distribute via its website.