Tagged / corporate governance

‘How boards strategize’ explored in new student-staff study

Research news, student research, Uncategorized

Marg Concannon

The strategy work of boards of directors has been a puzzle in the corporate governance literature for a long time. But the picture is becoming clearer, thanks to a paper soon to be published and co-written by a Master’s graduate and staff member in the Faculty of Management at BU.

After the financial crisis the work of boards became especially pertinent, for companies and public policy. Some boards — think of Royal Bank of Scotland and HBOS — manifestly failed both in strategizing  and in monitoring the performance of managers. The shortcomings contributed to a long, global economic malaise. Margaret Concannon earned an MSc in Corporate Governance with Distinction at BU in 2015 with a dissertation that examined how the work of boards has changed. Now, writing with Donald Nordberg, Associate Professor of Strategy and Corporate Governance, her study has become a journal article, due to appear soon in European Management Journal.

Donald Nordberg

Their paper, “Boards strategizing in liminal spaces: Process and practice, formal and informal,” shows how the theory of liminality, developed in anthropology to study rites of passage and adapted in organisation studies, can explain how, after the crisis, the increasingly hierarchical nature of the monitoring work of boards has pushed often strategy off the formal agenda. But strategizing has emerged again in new, informal settings and spaces, where the creativity possible in liminality can reassert itself. The paper explores what benefits that brings — and what risks.

Contesting corporate governance – research at BU

Research news, Research themes, Uncategorized

Prime Minister Theresa May has recently mooted a Germanic-turn for corporate governance in the UK, an echo of a heated debate over the shape of boards of directors in listed companies raging over the past 25 years. By coincidence, BU’s Donald Nordberg, Associate Professor in the Faculty of Management, has been examining the controversies over board design since the Cadbury Code was written in 1992, as investors, corporate chairmen and others wrestled with whether to recommend continuing with unitary boards or follow the German model of dual boards with worker representation. His paper, “Contestation over board design and the development of UK corporate governance,” has just won the prize as Best Paper in Management and Business History at the British Academy of Management conference in Newcastle. Could history be about to repeat itself? The conference paper is at http://eprints.bournemouth.ac.uk/23744/.

New submission to eBU

BU research, Publishing

Professor of Financial Economics, and Deputy Dean for Research in the Business School, Andy Mullineux has submitted a paper to eBU titled ‘Banking for the Public Good’.

The abstract is as follows:

Bank shareholders cannot be expected to provide good stewardship to banks because there is a conflict of interests between the shareholder owners and a non-mutually owned bank’s depositors; who provide the bulk of the funds in traditional retail banks and are willing to accept a lower return on their savings than shareholders, in return for lower risk exposure.  Regulation is required to protect depositors where deposit insurance schemes are at best partially funded and underwritten by taxpayers, who in turn need to be protected, and to deliver financial stability, a public good.  Once some banks become ‘too big (to be allowed) to fail’ (TBTF), they enjoy additional implicit public (taxpayer) insurance that enables them to fund themselves more cheaply than smaller banks, which gives them a competitive advantage.  The political influence of big banks in the US and the UK is such that they can be regarded as financial oligarchies that have hitherto successfully blocked far reaching structural reform in the wake of the ‘Global Financial Crisis’ and lobbied successfully for the financial sector liberalisation that preceded it. The TBTF problem and associated moral hazard has been worsened by mergers to save failing banks during the crisis and as a result competition within a number of national banking systems, notably the UK, has been significantly reduced.  Solutions alternative to making the banks small enough to be allowed to fail are considered in this paper, but it is difficult to be convinced that they will deliver banks that promote the common or public good.  It is argued that regulating retail banking as a utility and pooling insurance against financial instability using pre-funded deposit insurance schemes, with risk related premiums that can also serve as bank resolution funds, should be pursued; and that capital leverage ratios and/or Financial Activity Taxes might be used to ‘tax’ the size of banks.

This paper can be viewed, reviewed and commented on by following this link – http://ebu/index.php/ebu/article/view/10 – alternatively when on campus just type in ‘ebu’ into your web browser address bar.