<?xml version="1.0" encoding="UTF-8"?><?xml-stylesheet type="text/css" href="https://igopp.org/wp-content/themes/IGOPP/rss-style.css" ?><rss version="2.0"
	xmlns:content="http://purl.org/rss/1.0/modules/content/"
	xmlns:wfw="http://wellformedweb.org/CommentAPI/"
	xmlns:dc="http://purl.org/dc/elements/1.1/"
	xmlns:atom="http://www.w3.org/2005/Atom"
	xmlns:sy="http://purl.org/rss/1.0/modules/syndication/"
	xmlns:slash="http://purl.org/rss/1.0/modules/slash/"
	>

<channel>
	<title>IGOPPRisk management &#8211; IGOPP</title>
	<atom:link href="https://igopp.org/en/tag/risk-management-en/feed/" rel="self" type="application/rss+xml" />
	<link>https://igopp.org/en</link>
	<description></description>
	<lastBuildDate>Mon, 20 Apr 2026 14:35:38 +0000</lastBuildDate>
	<language>en-US</language>
	<sy:updatePeriod>hourly</sy:updatePeriod>
	<sy:updateFrequency>1</sy:updateFrequency>
	<generator>https://wordpress.org/?v=4.7.29</generator>
	<item>
		<title>Corporate Governance in the post-pandemic world</title>
		<link>https://igopp.org/en/corporate-governance-in-the-post-pandemic-world/</link>
		<comments>https://igopp.org/en/corporate-governance-in-the-post-pandemic-world/#respond</comments>
		<pubDate>Fri, 01 May 2020 15:42:27 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Crise financière]]></category>
		<category><![CDATA[Financial crisis]]></category>
		<category><![CDATA[Gestion des risques]]></category>
		<category><![CDATA[Parties prenantes]]></category>
		<category><![CDATA[Risk management]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/corporate-governance-in-the-post-pandemic-world/</guid>
		<description><![CDATA[Human beings are wonderful amnesiacs, an observation grounded in the history of traumatic events which have faded gradually into oblivion. That may well be the case with the current pandemic. For instance, how did societies, corporations and their governance system cope with recent dramatic events (so called “Black Swans” or for the more statistically inclined [&#8230;]]]></description>
		<content><![CDATA[Human beings are wonderful amnesiacs, an observation grounded in the history of traumatic events which have faded gradually into oblivion. That may well be the case with the current pandemic.

For instance, how did societies, corporations and their governance system cope with recent dramatic events (so called “Black Swans” or for the more statistically inclined “Six-Sigmas” events, although many would rightfully question whether these were really “Black Swans”)?

Take the financial/economic crisis of 2007-2008. Few sequels remain. Regulations of the financial sector were enhanced somewhat, banks had to increase their capital, executive compensation was “subjected” to an advisory “say-on-pay” vote by shareholders and some of the most outrageous financial speculations were curtailed. But overall, not much has changed despite the panic and dread at the time when many knowledgeable observers and actors feared a total collapse of the world’s
financial and economic system.

But 9/11 is a different story. Although located in New York, the event has brought about lasting, dramatic changes on an  international scale. Air travel was never the same after 9/11. States and government have increased permanently their authority and means to surveil and control societies and the worldwide flow of communications. Some individual freedoms were sacrificed on the altar of security with the consent (?) of the citizenry.

As the current pandemic has a much broader and deeper impact, the 9/11 scenario offers a weak template for what will happen when the pandemic begins to fade away: greater control on citizens’ behavior, close monitoring of all movements through instant communications, government-issued safe-conducts to gain access to any public event. Constitutionally protected individual freedoms will be infringed upon by a State/medical bureaucracy determined to protect us at all costs. All of these coercive measures will be promoted, and accepted, as essential to avoid a recurrence of some form of pandemic.

This painful experience will also foster some changes of a social/political nature: the work arrangements adopted during the crisis will call for a critical re-thinking of the standard pattern of commuting/office work/in-person meetings with colleagues. The resulting reduction of “polluting travel” will be hailed by all environmentalists despite the “irrelevant” cost of anomie, social isolation and estrangement.

The inevitable quest for greater self-sufficiency in many areas (food, pharmaceuticals, etc.) will bring about different industrial policies as well as a renewed skepticism about “globalization” and its supposed benefits. But this latest crisis may also generate a lasting anxiety and a sense of vulnerability in large segments of the population, who will subject all their public activities to the imperatives of total safety.

The role and responsibility of boards of directors

1. Coping with uncertainty

Even if 9/11 or the 2008 financial crisis may not fully qualify as Black Swans, for most corporations these events were unexpected and unplanned for. Corporations were taken by surprise and had to improvise some response. After the 2008 financial crisis particularly, most boards have enhanced their role in risk monitoring and risk mitigation.

But, boards have to cope with uncertainty, not only risk. Uncertainty is different from risk because there is no probability estimate of the occurrence of uncertain event within a given time frame, no way to predict the likely occurrence of a “six-sigma” event. The typical “predict-and-prepare” approach of risk management system and process does not work.

There are always “clairvoyants” who claim, with some justification, that they had foreseen the catastrophe. But how often had they been wrong in the past?

So what is a board to do? To ask management to list all unlikely dramatic events to which a corporation may be vulnerable and prepare contingency plans for each would paralyze any organization. A bank executive claimed recently that his institution had planned for “all” contingencies (nuclear attacks, fires, hurricanes) but had never foreseen a pandemic (Richard Dufour, La Presse, April 25th 2020). What about tsunamis, 9.0 earthquakes, an asteroid hit, etc.?

In an uncertain world where unpredictable and uncontrollable events may have catastrophic consequences, a board of directors must call upon management to hoard strategic and financial resources, build redundancy, and increase the corporation’s flexibility and adaptability to uncertain events. (See Allaire and Firsirotu, Coping with Strategic Uncertainty, Sloan Management Review)

Coping with uncertainty means:

 	maintaining an acute sense of the firm's vulnerability;
 	experiencing the future as largely unknowable; and
 	considering the firm’s survival to be dependent on organizational flexibility, on building buffers and redundancy and on hoarding strategic and financial resources.

No doubt such measures will have a short-term impact on earnings per share, on return on assets, on optimal capital structure. But that is the cost of some preparedness to cope with uncertain events.

2. Designing the organization for a new set of circumstances

There will be a decisive relaxation, even rejection, of the neo-liberal framework which has defined the functioning of societies and large corporations for decades: the expectation of continuous growth in earnings per share; the cost-driven global search for the locations of cheapest labor where to farm out operations; the massive creation of income and wealth inequality; the indecent enrichment from financial speculation and legerdemain, from activities with little or no social value; the tradeoffs between debt, deficits and social expenditures with the former having a distinct priority over the latter.

Boards of directors should heed the early warnings of impending disturbances of a political and social nature. They may be harbingers of the next flock of black swans. If boards do not effectively handle expectations, they should expect governments, now flush with power, to take actions about work arrangements, executive
compensation, sharing of wealth, punitive taxation for outsourcing, and so forth.

Contrary to what one might have expected given the serious financial issues that will be faced by many business corporations, the recent infatuation of large institutional shareholders with ESG (Environment, Society, Governance) drivers and its corollary, the stakeholder model of the corporation, will not abate. Too much wind in those sails and the pandemic will push further for compliance by publicly traded corporations.

It behooves management and boards of directors to act pre-emptively in five areas:

 	Monitor and enhance the corporation’s self-sufficiency in critical supplies within the home country;
 	Review and re-assess all past decisions to outsource and off-shore operations to low-cost countries;
 	Design work arrangements to adapt to the circumstances post pandemic as well as to the people’s legitimate quest for balance, couple burden sharing;
 	Cut the Gordian Knot of executive compensation; examine the form and level of compensation so as to reduce the gap and set an acceptable ratio of top management compensation to the salary of the median employee;
 	As most large institutional funds have become advocates of ESG, make clear to shareholders what this emphasis and the above adjustments will mean for the management and performance of the company in the future.

The powerful forces of continuity, habits, and normalcy may bring us back to the status quo ante. We may wake up from this nightmare unscathed. Perhaps! But a board of directors should not take this happy ending for granted.

&#160;

The authors are solely responsible for the opinions expressed in this article.
]]></content>
		<wfw:commentRss>https://igopp.org/en/corporate-governance-in-the-post-pandemic-world/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Bombardier has a 50% chance of being in rail business in three years</title>
		<link>https://igopp.org/en/bombardier-has-a-50-chance-of-being-in-rail-business-in-three-years/</link>
		<comments>https://igopp.org/en/bombardier-has-a-50-chance-of-being-in-rail-business-in-three-years/#respond</comments>
		<pubDate>Fri, 17 Jan 2020 19:47:41 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Risk management]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=12301/</guid>
		<description><![CDATA[Michel Nadeau, executive manager at the Institute for Governance and former deputy CEO at Caisse de dépôt, weighs in on Bombardier&#8217;s struggles. He says that while he believes the company will survive, it will be a much small corporation. He also says that there is a 50% chance that the Montreal-based business will still be [&#8230;]]]></description>
		<content><![CDATA[Michel Nadeau, executive manager at the Institute for Governance and former deputy CEO at Caisse de dépôt, weighs in on Bombardier's struggles. He says that while he believes the company will survive, it will be a much small corporation. He also says that there is a 50% chance that the Montreal-based business will still be in the rail business in the next three-five years.

To see the interview, please click here. [1]

 [2]

[1] https://www.bnnbloomberg.ca/video/~1878681
[2] https://www.bnnbloomberg.ca/video/~1878681]]></content>
		<wfw:commentRss>https://igopp.org/en/bombardier-has-a-50-chance-of-being-in-rail-business-in-three-years/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>How a proposed new ‘right’ for shareholders could badly damage corporate boards</title>
		<link>https://igopp.org/en/who-should-pick-board-members-3/</link>
		<comments>https://igopp.org/en/who-should-pick-board-members-3/#respond</comments>
		<pubDate>Thu, 07 Dec 2017 15:52:15 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Independence of Board members]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Risk management]]></category>
		<category><![CDATA[Shareholders]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9427/</guid>
		<description><![CDATA[There is a frenzied rush to get/give a new ‘right” to shareholders, the right to put up their own nominees for board membership. Boards of directors, so goes a dominant opinion, are not to be fully trusted to pick the right kind of people as directors or to shift the membership swiftly as circumstances change, [&#8230;]]]></description>
		<content><![CDATA[There is a frenzied rush to get/give a new ‘right” to shareholders, the right to put up their own nominees for board membership. Boards of directors, so goes a dominant opinion, are not to be fully trusted to pick the right kind of people as directors or to shift the membership swiftly as circumstances change, unless some Damocles sword is installed over their heads.

By the end of the 2017 proxy season, 60% of S&#38;P 500 companies had, voluntarily or forcibly, adopted proxy access for board nominations. The following provisions have become standard: ownership of 3% of a company’s voting shares for at least three years, and the right to nominate up to 20% of the board by a shareholder or group of up to 20 shareholders.

This access to voting proxies is about to become an integral part of corporate governance in Canada. All banks have come on board, though still claiming that the existing legal threshold of 5% should be maintained.

The Canadian Coalition for Good Governance (CCGG) has now come out swinging in support of this practice for all publicly traded companies. (Janet McFarland and James Bradshaw, Globe and Mail; November 30th 2017)

It is very unlikely that major corporations will try to oppose the movement as many institutional investors are fiercely supportive of this measure. However, the eventual impact of this initiative on corporate governance raises important issues that seem totally absent from the discussions around this new “right” of shareholders.

Proxy access may have adverse effect on internal board dynamics 

Shareholder access to the director nomination process brings forth a host of issues related to its application as well as a significant risk of adverse effects on board dynamics including:

 	A partial takeover of a responsibility historically assumed exclusively by the board;
 	the implicit belief that directors are only accountable to the shareholders and have a duty to promote exclusively the interests of shareholders, in spite of two Supreme court’s interpretation of the board’s responsibility to include other stakeholders;
 	the reputational issues of the directors submitted to a contested election and the self‑protective behaviour this would bring about;
 	the actual risk of secret negotiations being held between management and investors who are intending to propose nominees;
 	the overwhelming influence accruing to proxy voting advisory firms, whose clients would expect their voting recommendations on the nominees;
 	the risk that the independence of directors nominated by shareholders would be compromised or so perceived;
 	the risk of creating factions and a poisonous atmosphere within the board, which would hinder the proper functioning of the board;
 	the risk of ending up with a board deficient in relevant experience or competence;
 	the risk that the process be hijacked by single-issue groups of shareholders.

The consequences for an individual director being very publicly voted out of a board would be significant and painful, both in economic and reputational terms; this is true for both incumbent nominees and the new nominees proposed by the shareholders.

Faced with the risk and arbitrary nature of a contested election, the directors would try to promote their personal contributions with institutional investors (and proxy advisors), thus generating an unhealthy competition among colleagues. In any event, how would the thousands of shareholders, called upon to choose between several nominees, decide for which nominees to vote, which nominees to dismiss when the voting proxy contains more nominees than available seats?

Smaller institutional funds may well come to rely on proxy advisors (such as ISS or Glass Lewis), again increasing by tenfold the influence of these outfits on the governance of public corporations. These proxy advisors will propose, as per their usual practice, some obvious, measurable criteria to make this choice: age of the directors, number of years as a member of the board, which are, in fact, arbitrary criteria, uncorrelated with actual performance.

Even more likely, boards of directors will initiate discussions and negotiations with institutional investors who have indicated their intention to propose their own nominees in an effort to reach common ground. These secret negotiations are likely to result in some of the nominees proposed by institutional investors becoming the nominees of management and some current directors presumably viewed, more or less deservedly, as being weaker (older, longer tenure) forcibly retired.

Anyone believing that this process is likely to produce stronger boards in the long run needs to consider anew the risks imposed on current and prospective board members as well as the likely impact on the climate and dynamics of boards.

This list of plausible consequences from granting shareholders the right to propose their nominees for the board should give pause to this seemingly unstoppable rush and get some thoughtful governance specialists to push back.

&#160;

Opinions expressed here are the author’s own.
]]></content>
		<wfw:commentRss>https://igopp.org/en/who-should-pick-board-members-3/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Dow Jones Erred By Going Nuclear on Dual-Class Shares</title>
		<link>https://igopp.org/en/dow-jones-erred-by-going-nuclear-on-dual-class-shares/</link>
		<comments>https://igopp.org/en/dow-jones-erred-by-going-nuclear-on-dual-class-shares/#respond</comments>
		<pubDate>Thu, 07 Sep 2017 19:27:55 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Columbia Law School Blog]]></category>
		<category><![CDATA[Dual-class shares]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Risk management]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=8880/</guid>
		<description><![CDATA[In July 2017, Dow Jones, goaded by the reaction to Snapchat having gone public with a class of shares without voting rights, announced that, after extensive consultation, it had decided to henceforth eliminate companies with dual-class shares from its indices, in particular the S&#38;P 500 Index. Over the last 10 years, putting money in passive [&#8230;]]]></description>
		<content><![CDATA[In July 2017, Dow Jones, goaded by the reaction to Snapchat having gone public with a class of shares without voting rights, announced that, after extensive consultation, it had decided to henceforth eliminate companies with dual-class shares from its indices, in particular the S&#38;P 500 Index.

Over the last 10 years, putting money in passive index funds has become a popular form of investment. An index fund is a pool of money invested in a way that is proportional to the composition of an overall index, the S&#38;P 500 being the most popular. Already in 2016, index funds managed some $506 billion in assets, accounting for 29 percent of all shares traded on American stock exchanges.

For a company to be excluded from the indices means that none of this large pool of money will be channeled into its shares, reducing demand and possibly depressing its share price. Of course, Dow Jones quickly grand-fathered such notable large dual-class companies as Alphabet (Google), Facebook, Berkshire Hathaway (Warren Buffett’s company) and so on.

Targeting family companies and entrepreneurs
The Dow Jones decision is actually meant to scare budding entrepreneurs when the time comes for their companies to go public. It is a well-known and important fact that entrepreneurs want to keep control of their businesses so that they can implement their strategic visions unhindered by short-term shareholders and their financial coterie.

As tapping into public markets to finance their growth usually meant listing their companies on a stock exchange, entrepreneurs sought to keep control of their companies by issuing two classes of shares, one with multiple votes, which they retained and through which they would control their companies over time.

Entrepreneurs usually found very receptive investors who did understand that dual-class shares were the price to pay to ride the value creation of these entrepreneurs. Actually, some 11 percent of all traded companies on U.S. exchanges have adopted two classes of shares.

In 2015, according to Prosoaker Research (2016), 24 percent of all new share offerings (IPOs) in the U.S. were made with a dual-class structure, a sharp increase from 15 percent in 2014 and 18 percent in 2013. So, young companies such as Alphabet (formerly Google), Facebook, LinkedIn, TripAdvisor (and, in Canada, Cara, BRP, Shopify, Spin Master, Stingray) have issued two classes of shares to assure unassailable control over their companies and relative imperviousness to the short-term gyrations of earnings and stock price.

The surging popularity of this type of capital structure has agitated institutional investors and other types of shareholders that pretend, with no legal support, to be the owners of the companies. Skirmishes about dual-class shares then turned into an all-out war led by index fund managers, some institutional investors, influential academics, the governance industry, and investment bankers. They allege that dual-class shares result in a discounted value and a poor relative performance. They are prone to claim that the one share-one vote principle is the moral equivalent of the sacrosanct one person-one vote of electoral democracy.

Of course that equivalence between electoral democracy and shareholding is totally bogus. The real equivalence would call for one shareholder-one vote. In a democracy, the fact that one pays $1 million in taxes does not translate into 1,000 votes, or 1,000 times more votes given to someone who pays $1,000 in taxes.

Furthermore, in an electoral democracy, newcomers have to wait for a considerable period of time before being granted citizenship and thus the right to vote; and certainly visitors and tourists who happen to be in a foreign country on its election day do not get to vote. That’s how democracies work. But “corporate democracy” gives the right to vote immediately upon purchase and share-swappers, tourists in effect, do get the right to vote if they happen to be around on the record date.

What about the performance of companies with dual-class shares?
The Canadian evidence, as the following table suggests, is overwhelming that dual-class companies actually perform well.

Performance of Canadian dual-class firms, compared with single-class firms (or reference index) over 5, 10, and 15 year periods



As for the U.S. case, it is ironic that at virtually the same time Dow Jones was issuing its edict, a team of respected authorities on family firms and dual-class shares released the results of a vast study based on 2,379 industrial firms (non-financial and non-utility) over the years 2001 to 2015.

What do they conclude?
“Striking, we find a very strong association between founding family ownership and dual-class firms. Founders or their descendants control nearly 89% of dual class firms but only about 28% of single class firms.”….“[W]e find that a buy-and-hold strategy of dual class family firms earns excess returns of about 350 basis points [3.5%] more per year relative to our benchmark (single class nonfamily firms). Results from the matched sample suggest an even greater excess return – about 430 basis points more per year versus the reference firms. After controlling for time, industry, and a wide variety of firm-specific factors, our analysis does not lend support to the notion that dual class structures harm outside investors.” (Anderson, Ronald, Ezgi Ottolenghi and David Reeb, “The dual class premium: a family affair”, SSRN July 19, 2017)

Who really gains from the Dow Jones decision?
Clearly, short-term investors and activist hedge funds stand to gain from the Dow Jones decision to push emerging family companies to undertake financial engineering maneuvers, or sell their companies in order to produce quick gains in share price. Thus, an additional group of companies that were out of their reach will now become potential targets.

How will entrepreneurs of the future react to this threat?
Future entrepreneurs may shun public funding and stock market listings, curtailing their growth or finding alternative modes of financing. They may resist trading their control for inclusion in an index.

They may correctly surmise that passive investors in index funds will complain bitterly to sellers of these funds about the exclusion of new, high-tech, high-performance companies from their indices.

Some enterprising fund manager may well create an index strictly reserved for dual-class companies.

Unfortunately, too many entrepreneurs may give up their control under threat of exclusion from indices. Dow Jones’ short-sighted, poorly grounded decision will be responsible for this outcome.

Conclusion
It would have been far wiser for Dow Jones to use its leverage to get dual-class companies to abide by some simple rules in order to be included in their indices, such as was proposed by the Canadian Coalition for Good Governance and IGOPP:

 	Ban any company with a class of shares without voting rights;
 	Impose a mandatory pro rata distribution of change-of-control consideration, what is called a “coattail” provision in Canada
 	Cap the ratio of multiple votes so that a controlling shareholder must hold a substantial economic interest to maintain absolute control of the corporation;
 	Demand some form of acceptable sunset provision from a variety of choices. As Andrew William Winden wrote, “Careful selection of such provisions can satisfy both the desire of entrepreneurs to pursue their idiosyncratic visions for value creation without fear of interference or dismissal and the need of investors for a voice to ensure management accountability. Prohibition [of dual-class shares] and strict time-based [sunset clause] are neither necessary nor appropriate given the plethora of other alternatives.”

This post comes to us from Yvan Allaire, executive chair of the Institute for Governance of Private and Public Organizations (IGOPP) and emeritus professor of strategy. He is solely responsible for the opinions expressed in this post.
]]></content>
		<wfw:commentRss>https://igopp.org/en/dow-jones-erred-by-going-nuclear-on-dual-class-shares/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Dow-Jones goes nuclear on dual class of shares</title>
		<link>https://igopp.org/en/dow-jones-goes-nuclear-on-dual-class-of-shares/</link>
		<comments>https://igopp.org/en/dow-jones-goes-nuclear-on-dual-class-of-shares/#respond</comments>
		<pubDate>Thu, 24 Aug 2017 14:41:18 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Dual-class shares]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Risk management]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=8964/</guid>
		<description><![CDATA[In July of this year, Dow-Jones, goaded by the reaction to Snapchat having gone public with a class of shares without voting rights, announced that, after extensive consultation, it had decided to henceforth eliminate dual-class companies from its indices, in particular the S&#38;P 500 Index. Over the last ten years, putting money in passive index funds has become [&#8230;]]]></description>
		<content><![CDATA[In July of this year, Dow-Jones, goaded by the reaction to Snapchat having gone public with a class of shares without voting rights, announced that, after extensive consultation, it had decided to henceforth eliminate dual-class companies from its indices, in particular the S&#38;P 500 Index.

Over the last ten years, putting money in passive index funds has become a popular form of investment. An index fund is a pool of money invested in a way that is proportional to the composition of an overall index, the S&#38;P 500 being the most popular. Already in 2016, index funds managed some 506 billion $US in assets, accounting for 29% of all shares traded on American stock exchanges.

For a company to be excluded from the indices means that none of this large pool of money will be channeled into its shares, reducing demand and possibly depressing its share price. Of course, Dow-Jones quickly grand-fathered such notable large dual-class companies as Alphabet (Google), Facebook, Berkshire Hathaway (Warren Buffet’s company) and so on.

Targeting family companies and entrepreneurs

The Dow-Jones decision is actually meant to scare budding entrepreneurs when the time comes for them to “go public”. It is a well-known and important fact that entrepreneurs want to keep control of their business so that they can implement their strategic vision unhindered by short-term shareholders and their financial coterie.

As tapping into public markets to finance their growth usually meant listing their company on a stock exchange, entrepreneurs sought to keep control of their company by issuing two classes of shares, one with multiple votes, which they retained and through which they would control their company over time.

Entrepreneurs usually found very receptive investors who did understand that dual class of shares were the price to pay to ride the value creation of these entrepreneurs. Actually, some 11% of all traded companies on U.S. exchanges have adopted a dual class of shares.

In 2015, according to Prosoaker Research (2016), 24% of all new share offerings (IPOs) in the U.S. were made with a dual class structure, a sharp increase from 15% in 2014 and 18% in 2013. So, young companies such as Alphabet (i.e. Google), Facebook, LinkedIn, TripAdvisor.  (and, in Canada, Cara, BRP, Shopify, Spin Master, Stingray) have issued two classes of shares to assure an unassailable control over their companies and relative imperviousness to the short-term gyrations of earnings and stock price.

The surging popularity of this type of capital structures has agitated institutional investors and other types of shareholders who pretend, with nary a legal support, to be the «owners» of the companies. Skirmishes about dual class of shares then turned into an all-out war led by index fund managers, some institutional investors, influential academics, the governance industry, investment bankers et alia. They allege that a dual class of shares results in a discounted value and a poor relative performance. They are prone to claim that the “one share-one vote” principle is the moral equivalent of the sacrosanct “one person-one vote” of electoral democracy.

Of course that equivalence between electoral democracy and shareholding is totally bogus. The real equivalence would call for “one shareholder-one vote”. In a democracy, the fact that one pays a million dollars in taxes does not translate in a thousand votes as compared to one who pays one thousand dollars in taxes!

Furthermore, in an electoral democracy, new comers have to wait for a considerable period of time before being granted citizenship and thus the right to vote; and certainly visitors and tourists who happen to be in a foreign country on its election day do not get to vote. That’s how democracies work; but “corporate democracy” gives the right to vote immediately upon purchase and share-swappers, tourists in effect, do get the right to vote if they happen to be around on record date.

What about the performance of companies with a dual class of shares?

The Canadian evidence, as the following table suggests, is pretty overwhelming that dual-class companies actually perform well.

 Performance of Canadian dual class firms, compared to single class firms  (or reference index) over 5, 10 and 15 years periods



As for the U.S. case, it is ironic that at virtually the same time Dow-Jones was issuing its edict, a team of respected authorities on family firms and dual class of shares made public the results of a vast study based on 2,379 industrial firms (non-financial and non-utility) over the years 2001 to 2015.

What do they conclude?

“Striking, we find a very strong association between founding family ownership and dual class firms. Founders or their descendants control nearly 89% of dual class firms but only about 28% of single class firms.”….“[W]e find that a buy-and-hold strategy of dual class family firms earns excess returns of about 350 basis points [3.5%] more per year relative to our benchmark (single class nonfamily firms). Results from the matched sample suggest an even greater excess return – about 430 basis points more per year versus the reference firms. After controlling for time, industry, and a wide variety of firm-specific factors, our analysis does not lend support to the notion that dual class structures harm outside investors.”

(Anderson, Ronald, Ezgi Ottolenghi and David Reeb, “The dual class premium: a family affair”, SSRN July 19, 2017)

Who really gains from the Dow-Jones decision?

Clearly, short-term investors and activist hedge funds stand to gain from the Dow-Jones license to push and shove emerging family companies to undertake financial engineering manoeuvers, or sell their company in order to produce quick gains in share price. Thus, an additional group of companies usually out of their reach will now become potential targets.

How will entrepreneurs of the future react to this threat?

They may shun public funding and stock market listing, curtailing their growth or finding alternative modes of financing. They may resist trading their control for “inclusion” in an index.

They may correctly surmise that “passive” investors in index funds will complain bitterly to sellers of these funds about the exclusion of new, high-tech, high-performance companies from their index.

Some enterprising fund manager may well create an index strictly reserved for dual-class companies.

Unfortunately, some, too many, entrepreneurs may give up their control under threat of exclusion from indices. Dow-Jones’ short-sighted, poorly grounded decision will be responsible for this outcome.

Conclusion

 It would have been far wiser for Dow-Jones to use its leverage to get dual class companies to abide by some simple rules in order to be included in their indices, such as was proposed by the Canadian Coalition for Good Governance and IGOPP:

 	Ban any company with a class of shares without voting rights;
 	Impose a mandatory pro rata distribution of change-of-control consideration, what is called a “coattail” provision in Canada;
 	Cap the ratio of multiple votes so that controlling shareholder must hold a substantial economic interest to maintain absolute control of the corporation;
 	Demand some form of acceptable sunset provision from a vast gamut of choices. “Careful selection of such provisions can satisfy both the desire of entrepreneurs to pursue their idiosyncratic visions for value creation without fear of interference or dismissal and the need of investors for a voice to ensure management accountability. Prohibition [of dual class of shares]and strict time-based [sunset clause] are neither necessary nor appropriate given the plethora of other alternatives”

(“Sunrise, Sunset:An Empirical and Theoretical Assessment of Dual-Class Stock Structures”, Andrew William Winden, SSRN, 2017)

&#160;

The author is solely responsible for the opinions expressed herein.
]]></content>
		<wfw:commentRss>https://igopp.org/en/dow-jones-goes-nuclear-on-dual-class-of-shares/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Trump-era shift: CEOs find a voice for moral outrage</title>
		<link>https://igopp.org/en/trump-era-shift-ceos-find-a-voice-for-moral-outrage/</link>
		<comments>https://igopp.org/en/trump-era-shift-ceos-find-a-voice-for-moral-outrage/#respond</comments>
		<pubDate>Thu, 17 Aug 2017 15:19:07 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Risk management]]></category>
		<category><![CDATA[Shareholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=8778/</guid>
		<description><![CDATA[Corporate America started the year ready to engage with a controversial but business-minded president. This week CEOs have risen in chorus to denounce Trump&#8217;s lackluster response to racism. Not since the 1930s, when prominent business heads publicly broke with Franklin Roosevelt, has a US president seen such a revolt by leading business executives. [ &#8230; [&#8230;]]]></description>
		<content><![CDATA[Corporate America started the year ready to engage with a controversial but business-minded president. This week CEOs have risen in chorus to denounce Trump's lackluster response to racism.

Not since the 1930s, when prominent business heads publicly broke with Franklin Roosevelt, has a US president seen such a revolt by leading business executives.

[ ... ]

Today, a string of business leaders are upbraiding a conservative president because of his character, specifically his fumbled attempts at denouncing neo-Nazis and white supremacists holding a rally turned violent in Charlottesville, Va., over the weekend.

In 1936, Roosevelt seized the moral high ground, saying he was battling “the forces of selfishness” and went on to a landslide election victory.

Now, it appears it’s the CEOs who have the high ground. While President Trump waited two days before specifically denouncing the ideologies of white supremacists, the KKK, and others, then seemed to undercut that denunciation in a subsequent press conference, executives made clear their opposition to hate groups and quit two White House advisory boards in droves –a rare and stinging rebuke from the business community to a sitting president.

[ ... ]

Taking such high-profile positions on nonbusiness issues is an uncomfortable position for many CEOs. They want to avoid controversy, but the president’s comments were so out-of the-mainstream that taking a stand against them offered no downside.

“This was a no-brainer,” says Yvan Allaire, executive chair of the Institute for Governance in Montreal. But he cautions that this does not signal a new era of corporate outspokenness, because CEOs can’t say anything that would hurt their company’s value. Shareholders and hedge funds would be quick to punish the stock.

“CEOs are as moral a group of people as any other,” he says. “But their ability to take moral stands is constrained.”

Read more [1]

[1] https://www.csmonitor.com/Business/2017/0817/Trump-era-shift-CEOs-find-a-voice-for-moral-outrage]]></content>
		<wfw:commentRss>https://igopp.org/en/trump-era-shift-ceos-find-a-voice-for-moral-outrage/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Corporate Governance: The New Paradigm</title>
		<link>https://igopp.org/en/corporate-governance-the-new-paradigm/</link>
		<comments>https://igopp.org/en/corporate-governance-the-new-paradigm/#respond</comments>
		<pubDate>Wed, 11 Jan 2017 21:23:46 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Activism]]></category>
		<category><![CDATA[Board members' compensation]]></category>
		<category><![CDATA[Diversity]]></category>
		<category><![CDATA[Harvard Law School Forum]]></category>
		<category><![CDATA[Hedge funds]]></category>
		<category><![CDATA[Risk management]]></category>
		<category><![CDATA[Stakeholders]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=7040</guid>
		<description><![CDATA[[ &#8230; ] a growing body of academic research has confirmed that short-term financial activists are a major contributor to systemic short-termism in managing businesses and investments. The notion that activist attacks increase, rather than undermine, long-term value creation has been resoundingly discredited. Economists Yvan Allaire and François Dauphin, for example, demonstrated in a series [&#8230;]]]></description>
		<content><![CDATA[[ ... ]

a growing body of academic research has confirmed that short-term financial activists are a major contributor to systemic short-termism in managing businesses and investments. The notion that activist attacks increase, rather than undermine, long-term value creation has been resoundingly discredited. Economists Yvan Allaire and François Dauphin, for example, demonstrated in a series of papers issued by the Institute for Governance of Private and Public Corporations that the “benefits” of activism cited by its proponents were, to the extent not temporary, marginal at best, largely the result of basic short-term financial maneuvers (such as asset sales, spin-offs, buybacks and cost cuts) and not of any superior long-term strategies and may simply constitute a wealth transfer from employees and creditors to shareholders rather than actual wealth creation.

Read more [1]

[1] https://corpgov.law.harvard.edu/2017/01/11/corporate-governance-the-new-paradigm/]]></content>
		<wfw:commentRss>https://igopp.org/en/corporate-governance-the-new-paradigm/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Who Should Pick Board Members?</title>
		<link>https://igopp.org/en/who-should-pick-board-members-2/</link>
		<comments>https://igopp.org/en/who-should-pick-board-members-2/#respond</comments>
		<pubDate>Mon, 30 Nov 2015 20:58:44 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Chairman of the Board]]></category>
		<category><![CDATA[Columbia Law School Blog]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Proxy Advisors]]></category>
		<category><![CDATA[Risk management]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=5852</guid>
		<description><![CDATA[There is a frenzied rush for shareholders to get a new ‘right”, the right to put up their own nominees for board membership. Boards of directors, so goes a dominant opinion, are not to be fully trusted to pick the right kind of people as directors or to shift the membership swiftly as circumstances change. [&#8230;]]]></description>
		<content><![CDATA[There is a frenzied rush for shareholders to get a new ‘right”, the right to put up their own nominees for board membership. Boards of directors, so goes a dominant opinion, are not to be fully trusted to pick the right kind of people as directors or to shift the membership swiftly as circumstances change.

In 2014/2015, proposals from institutional investors (or even from management) to give shareholders access to the board nomination process have proliferated. No less than 74 U.S. corporations[1] [1] have now inserted (or soon will) in their by-laws the “right” of shareholders to nominate members of the board, among which GE, Coca Cola, McDonald’s, Chevron, Citigroup, Verizon, and so on. And a tsunami of similar proposals is visible over the horizon.

Of course, this agitation started In August 2010 when the Securities and Exchange Commission (SEC) introduced Rule 14a-11 giving shareholders having owned at least 3% of a public corporation’s shares for at least 3 years, the right to propose nominees to the board (for up to a maximum of 25% of the members of the existing board).

This new regulation was immediately challenged in the courts and had to be withdrawn when it was struck down. However, an amendment to Rule 14a-8 (amendment made by the SEC to accommodate its proposed regulation on proxy access) remained in force; its purpose was to allow shareholders to submit proposals on proxy access rules, which, if adopted by a majority of shareholders, were to be made part of the corporation’s by-laws.

This access to voting proxies is fast becoming a part of the governance landscape in the United States; the only issues that are still debated are qualifying ones: the level of shareholding, the holding period, the maximum number of shareholders which may band together to achieve the admission criteria and various aspects of its implementation.

It is very unlikely that major corporations will try to oppose the movement as many institutional investors are fiercely supportive of this measure. However, the eventual impact of this initiative on corporate governance raises important issues that seem totally absent from the discussions around this new “right” of shareholders.

Proxy access may have adverse effect on internal board dynamics

Among the arguments supposedly supportive of shareholder access to the nominating process, one is particularly noxious: the notion that “fear” among board members of being singled out for replacement would lead them to raise their game.

The consequences for an individual director being voted out of a board would be very significant and painful, both in economic and reputational terms; this is true for both incumbent nominees and the new nominees proposed by the shareholders.

Faced with the risk and arbitrary nature of a contested election, the directors would try to promote their personal contributions with institutional investors (and proxy advisors), thus generating an unhealthy competition among colleagues. In any event, how would the thousands of shareholders, called upon to choose between several nominees, decide for which nominee to vote, which nominee to dismiss when the voting proxy contains more nominees than available seats?

Smaller institutional funds may well come to rely on proxy advisors (such as ISS or Glass Lewis), again increasing by tenfold the influence of these outfits on the governance of public corporations. These proxy advisors will propose, as per their usual practice, some obvious, measurable criteria to make this choice: age of the directors, number of years as a member of the board, which are, in fact, arbitrary criteria, uncorrelated with actual performance.

Once these criteria are well understood, it is likely that corporations will try to preventively replace directors to avoid conflicts with large shareholders and to make rooms for their nominees. Therefore, directors would be shown the way out because they no longer satisfy the arbitrary criteria selected by proxy voting advisors without taking into account their actual contribution.

Even more likely, boards of directors will initiate discussions and negotiations with institutional investors who have indicated their intention to propose their own nominees in an effort to reach common ground. These secret negotiations are likely to result in some of the nominees proposed by institutional investors becoming the nominees of management and some current directors presumably viewed, more or less deservedly, as being weaker (older, longer tenure) forcibly retired.

Anyone believing that this process is likely to produce stronger boards in the long run needs to consider anew the calculus of current and prospective board members, the actions, likely dysfunctional, of people facing the humiliation (and economic loss) of an electoral rejection.

Shareholder access to the director nomination process brings forth a host of other issues related to the logistics of its application and the potential adverse effects on board dynamics including:

 	the usurpation of a responsibility historically and legally devolved exclusively on the board;
 	the implicit, yet false, postulate whereby directors are only accountable to the shareholders and are only responsible for the interests of shareholders;
 	the reputational issues of the directors submitted to a contested election and the self‑protective behaviour this would bring about;
 	the actual risk of secret negotiations being held between management and investors who are intending to propose nominees;
 	the overwhelming influence accruing to proxy voting advisory firms, whose clients would expect their voting recommendations on the nominees;
 	the risk that the independence of directors nominated by shareholders would be compromised or so perceived;
 	the risk of creating factions and a poisonous atmosphere within the board, which would compromise the proper functioning of the board;
 	the risk of ending up with a board deficient in relevant experience or competence;
 	the risk that the process be hijacked by single-issue groups of shareholders.

These unfortunate outcomes of granting shareholders the right to propose their nominees for the board should merit careful consideration before jumping on the bandwagon.

[1] [2] Data from SharkRepellent.net, as of September 8th, 2015.

This post comes to us from Yvan Allaire, Ph.D. (MIT) and Executive Chair of the Institute for governance of private and public organizations (IGOPP), and François Dauphin, Chartered Professional Accountant (CPA, CMA), MBA and Director of Research of IGOPP. The post is based on the authors’ Institution Policy Paper, entitled “Who should pick board members? Proxy Access by Shareholders to the Director Nomination Process” and is available here [3].

[1] http://clsbluesky.law.columbia.edu/2015/11/30/who-should-pick-board-members/#_ftn1
[2] http://clsbluesky.law.columbia.edu/2015/11/30/who-should-pick-board-members/#_ftnref1
[3] https://igopp.org/en/who-should-pick-board-members/]]></content>
		<wfw:commentRss>https://igopp.org/en/who-should-pick-board-members-2/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>IGOPP Calls for Executive Compensation Reform in Groundbreaking Study</title>
		<link>https://igopp.org/en/igopp-calls-for-executive-compensation-reform-in-groundbreaking-study/</link>
		<comments>https://igopp.org/en/igopp-calls-for-executive-compensation-reform-in-groundbreaking-study/#respond</comments>
		<pubDate>Wed, 06 Nov 2013 17:40:47 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Risk management]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">http://aimta712.org/igopp-calls-for-executive-compensation-reform-in-groundbreaking-study-3/</guid>
		<description><![CDATA[&#8220;The Institute for the Governance of Private and Public Organizations (IGOPP) announced today the release of their most recent policy paper on executive compensation, entitled &#8220;Pay for Value: Cutting the Gordian Knot of Executive Compensation&#8221;. The policy paper, prepared by Professor Yvan Allaire for the working group on compensation of IGOPP, noted that, &#8220;We are [&#8230;]]]></description>
		<content><![CDATA["The Institute for the Governance of Private and Public Organizations (IGOPP) announced today the release of their most recent policy paper on executive compensation, entitled "Pay for Value: Cutting the Gordian Knot of Executive Compensation".

The policy paper, prepared by Professor Yvan Allaire for the working group on compensation of IGOPP, noted that, "We are making a series of recommendations about the complex and emotionally charged issue of executive compensation. We hope that our analysis and recommendations will prove a valuable contribution to what has become the most salient and vexing governance issue."... Read more [1]

[1] http://www.prnewswire.com/news-releases/igopp-calls-for-executive-compensation-reform-in-groundbreaking-study-152490545.html]]></content>
		<wfw:commentRss>https://igopp.org/en/igopp-calls-for-executive-compensation-reform-in-groundbreaking-study/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Systemic federal risk :</title>
		<link>https://igopp.org/en/systemic-federal-risk/</link>
		<comments>https://igopp.org/en/systemic-federal-risk/#respond</comments>
		<pubDate>Wed, 09 Oct 2013 17:56:41 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Financial crisis]]></category>
		<category><![CDATA[National securities regulator]]></category>
		<category><![CDATA[Risk management]]></category>

		<guid isPermaLink="false">http://aimta712.org/?p=1800</guid>
		<description><![CDATA[The federal minister of finance is wrong to think a national securities commission would lower risk. Give the federal minister of finance his due: He is nothing if not persistent. Rebuffed by the Supreme Court of Canada in a unanimous and blunt judgment, the minister is trying to squeeze a national securities commission through the [&#8230;]]]></description>
		<content><![CDATA[The federal minister of finance is wrong to think a national securities commission would lower risk.

Give the federal minister of finance his due: He is nothing if not persistent. Rebuffed by the Supreme Court of Canada in a unanimous and blunt judgment, the minister is trying to squeeze a national securities commission through the small openings contained, as a sort of consolation prize, in the Supreme Court’s decision:

“While the proposed Act must be found ultra vires Parliament’s general trade and commerce power, a cooperative approach that permits a scheme that recognizes the essentially provincial nature of securities regulation while allowing Parliament to deal with genuinely national concerns remains available…

However, as important as the preservation of capital markets and the maintenance of Canada’s financial stability are, they do not justify a wholesale takeover of the regulation of the securities industry which is the ultimate consequence of the proposed federal legislation. The need to prevent and respond to systemic risk may support federal legislation pertaining to the national problem raised by this phenomenon, but it does not alter the basic nature of securities regulation which, as shown, remains primarily focused on local concerns of protecting investors and ensuring the fairness of the markets through regulation of participants.”

(Judgment of the Supreme Court, December 2011; emphasis added)

The federal minister of finance has thus embarked on a campaign to woo the provinces with trinkets and baubles of “cooperative federalism.” Ontario, which needed no persuasion as it has been drooling for a long time to become the home of a central, national securities commission, and British Columbia have jumped on the federal bandwagon. Other provinces are more reticent and may wave the train by. Certainly Quebec and Alberta, the formidable challengers of the last federal initiative, remain doggedly opposed to, and unimpressed with, this new variant.

But, why does the federal government manifest such determination to having it its way, to impose some central organization to oversee the securities business?

Let’s put aside any political motive that twisted minds might conjure up and suppose rather that the federal minister of finance is truly worried about the heightened systemic risk to the Canadian financial system brought on by our fragmented, provincially based securities commissions.

Is he right to fear that without a central coordinating body regulating securities, Canada could be handicapped in dealing with a systemic financial crisis of the sort the world experienced in 2008.

The answer is a simple and categorical no!

"Canada has no need of any ‘central’ securities commission"

The last financial crisis, the most lethal we have experienced since 1929, provided an eloquent demonstration: The countries with centralized securities commissions, such as the Unites States and Great Britain, were the most affected by the crisis. At no time did the crisis threaten the Canadian financial system; the only event that had a whiff of what was happening elsewhere occurred with respect to asset-backed commercial papers (the famous ABCP); but at no time did that unfortunate episode pose a systemic risk for Canada.

In fact, the six large Canadian banks represent the true systemic risk to our financial system; the size of their assets, the diversity of their operations and the linkages among them put the whole system at risk should one of them falter. However, these banks come wholly under federal jurisdiction. The Office of the Superintendent of Financial Institutions (OSFI) and the Bank of Canada wield the power and authority to impose all precautionary measures on these banks. In March 2013, under the terms of the Basel Accords, the OSFI formally decreed that the six Canadian banks were systemically important financial institutions (SIFI). As a result, these banks must submit to a set of measures (enhanced capital ratios, etc.) designed for worldwide institutions that have been so labeled.

Over-the-counter (OTC) derivatives, opaque and poorly regulated, played an important systemic role in triggering the last financial crisis. Remember AIG and its virtual insolvency resulting from its massive involvement in credit derivatives. The astronomical volume and transnational character of these OTC derivatives could once again create havoc for the international financial system. What should Canada do about these lethal derivatives? Does the absence of a “national” securities commission inhibit efforts to deal with this systemic problem?

Well, a little known instance, the Heads of Agencies (HoA), dealt with the issue swiftly, cooperatively and effectively. The HoA, under the leadership of the Governor of the Bank of Canada, brings together OSFI and the heads of the securities commissions of Alberta, B.C., Ontario and Quebec, to discuss and take actions on matters of national importance. The HoA has been tasked to implement all measures recommended by the G20 to which Canada has committed.

Canada now has a framework to enhance the transparency and international regulation of derivative instruments, a framework developed through a cooperative process, without the need of any “central” securities commission.

The federal minister of finance, once again, is basing his initiative on arguments that are unfounded in fact or in theory. Canadian systemic risk comes above all from the major universal banks, a sector wholly under federal jurisdiction.

As for other risks, the framework put in place to regulate over-the-counter derivatives provides a fine demonstration that the present system works well.

The burden of proof that the present system increases systemic risk in Canada falls squarely on the minister’s shoulders. It is a burden he has failed to discharge thus far.
]]></content>
		<wfw:commentRss>https://igopp.org/en/systemic-federal-risk/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
	</channel>
</rss>
