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Corporate governance - Solid foundations

ICAEW takes an active interest in corporate governance. Its latest initiative ‘Dialogue in Corporate Governance: New challenges’ is considering five questions arising from the recent crisis and seeing how they affect existing corporate governance frameworks. The questions are also being explored in a series of bite-size papers. Here, Christian Doherty interviews Jo Iwasaki, ICAEW’s head of corporate governance, on the purpose of companies, including the issues that her recent report, ‘What should companies be responsible for?’ attempts to answer.

Solid foundations

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The importance of good corporate governance cannot be overestimated. According to the OECD, those businesses that invest more in corporate governance policies and practices have produced substantially better operational and market results. It’s with that in mind that the ICAEW is encouraging company directors to think more strategically about their corporate governance strategies, and to question some of the established wisdom on how companies should behave.

Why does the global financial crisis matter to corporate governance?

Jo Iwasaki: There has been much criticism of short-termism and related behaviours that became apparent during the crisis. These are hardly separable from how companies should operate. Much criticism followed the events of the crisis – notably John Kay’s review of UK equity markets and their impact on the long-term performance and various initiatives from the European Commissions (see bit.ly/Xmedur).

This is an extract from the Finance & Management Magazine, Issue 224, September 2014.

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