In today’s age of technology disruption, increased political and social uncertainty, and changing regulatory paradigms, the role of corporate governance and the leadership of boards of directors have become more important than ever.
The recently launched
IESE Center for Corporate Governance aims to help board chairs, CEOs and board members better understand how to navigate the changing landscapes of their companies. Our Center will also strive to help them renew their commitment to developing their companies for long-term success. We plan to do so by generating new ideas on corporate governance and, in particular, on the changing role of boards of directors.
Research on corporate governance has grown exponentially over the past years. Nevertheless, some of the academic conclusions are still weak and cannot be easily generalized. Moreover, some research hypotheses seem interesting from a theoretical viewpoint, but are a bit distant from the concerns of boards of directors. Our Center looks to bridge this distance between academia and the real-life concerns of boards of directors. We plan to build upon the rich foundation of governance programs that IESE Business School already offers.
In our approach to corporate governance, we use some assumptions. The first is that a company is a complex and agile institution, with its own legal personality, whose founders usually have some aspiration for its long-term development. Shareholders own the shares of the firm and have certain rights –the right to a fair return on their investment, for instance- but they do not own the firm. Firms also employ people who make some specific contributions, key for the firm’s success. Financial institutions and markets also deal with the company under the expectation of its long-term development in an atmosphere of trust. To some extent, customers and suppliers also trust the firm and engage with it. In a nutshell, different parties who commit their resources to the firm end up trusting the firm and expecting its long-term success.
The second is that good governance should help firms develop and to be successful in the long-term for all the different parties that have contributed to the firm. A successful company should serve its clients well and generate fair and sustainable economic value in the process. To achieve this goal, the firm needs talented and committed people, ideas, financial resources and the trust of the whole community. A successful firm should compensate all the parties according to the extent of their contributions.
The third is that the board of directors has a key leadership role in the company and is not an agent of shareholders. The board is the central institution in corporate governance which helps develop the firm over the long-term and makes sure that the management team does a good job, not only through a rigorous monitoring process, but also through positive engagement with the top management on strategic issues. A specific task of the board is to develop the CEO and the top management team, while having a clear succession plan in place for them.
Through this newsletter, the Center also aims to help bring to IESE alumni and friends recent research and news of interest on the challenging world of corporate governance. A few years ago, good governance seemed like a luxury good; today good governance is a must-have for all firms, from start-ups to the largest firms. Good governance has become an indispensable element for successful companies that helps create companies with a lasting, positive impact on society.
We hope you enjoy reading this newsletter and will be grateful for your feedback! Please, contact us at
ccg@iese.edu
Professor Jordi Canals
President
IESE Center for Corporate Governance
