<?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>IGOPPValue-creating governance &#8211; IGOPP</title>
	<atom:link href="https://igopp.org/en/tag/value-creating-governance-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>IGOPP’s research on Stakeholders quoted in the Harvard Law School Forum on Corporate Governance</title>
		<link>https://igopp.org/en/letude-de-ligopp-sur-la-gouvernance-et-parties-prenantes-citee-dans-le-harvard-law-school-forum-on-corporate-governance/</link>
		<comments>https://igopp.org/en/letude-de-ligopp-sur-la-gouvernance-et-parties-prenantes-citee-dans-le-harvard-law-school-forum-on-corporate-governance/#respond</comments>
		<pubDate>Mon, 06 Jul 2020 18:12:54 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Press Releases]]></category>
		<category><![CDATA[Stakeholders]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/letude-de-ligopp-sur-la-gouvernance-et-parties-prenantes-citee-dans-le-harvard-law-school-forum-on-corporate-governance/</guid>
		<description><![CDATA[In his article published on July 3, 2020 by the Harvard Law School Forum on Corporate Governance Some Thoughts for Boards of Directors in 2020: A Mid-Year Update, Martin Lipton, a prominent New Yorker from the Wachtell, Lipton, Rosen &#38; Katz, referred to IGOPP’s research on Governance and stakeholders co-written by the professors Yvan Allaire [&#8230;]]]></description>
		<content><![CDATA[In his article published on July 3, 2020 by the Harvard Law School Forum on Corporate Governance Some Thoughts for Boards of Directors in 2020: A Mid-Year Update, Martin Lipton, a prominent New Yorker from the Wachtell, Lipton, Rosen &#38; Katz, referred to IGOPP’s research on Governance and stakeholders co-written by the professors Yvan Allaire and Stéphane Rousseau, respectively IGOPP’s chair of the board of directors and fully tenured professor at the Law School of the University of Montréal.

To read the article in the Harvard Law School Forum, click here. [1]

To read IGOPP’ research on Governance and Stakeholders, click here. [2]

[1] https://corpgov.law.harvard.edu/2020/07/02/some-thoughts-for-boards-of-directors-in-2020-a-mid-year-update/
[2] https://igopp.org/en/to-govern-in-the-interest-of-the-corporation-what-is-the-boards-responsibility-to-stakeholders-other-than-shareholders/]]></content>
		<wfw:commentRss>https://igopp.org/en/letude-de-ligopp-sur-la-gouvernance-et-parties-prenantes-citee-dans-le-harvard-law-school-forum-on-corporate-governance/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Mergers and acquisitions: Feds, activists disrupt US economic growth</title>
		<link>https://igopp.org/en/mergers-and-acquisitions-feds-activists-disrupt-us-economic-growth/</link>
		<comments>https://igopp.org/en/mergers-and-acquisitions-feds-activists-disrupt-us-economic-growth/#respond</comments>
		<pubDate>Wed, 06 Nov 2019 14:55:02 +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[Activism]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=12043/</guid>
		<description><![CDATA[By all indications mergers and acquisitions (M&#38;A) activity is on the rise. In the first five months of 2019, companies announced over $1 trillion in mergers and acquisitions, a 14% increase from the same period in 2018. This is generally good for the economy, the consumer and the shareholders alike. In fact, all Americans benefit [&#8230;]]]></description>
		<content><![CDATA[By all indications mergers and acquisitions (M&#38;A) activity is on the rise. In the first five months of 2019, companies announced over $1 trillion in mergers and acquisitions, a 14% increase from the same period in 2018. This is generally good for the economy, the consumer and the shareholders alike. In fact, all Americans benefit from the economies of scale, increased innovation, lower prices and stronger stock market returns that generally accompany bursts of mergers and acquisitions activity.

As we approach the upcoming national election cycle, economists find it difficult to pinpoint one specific reason for the current flurry of corporate M&#38;A activities in America. Recent developments, including the president’s tax reform bill, large corporate cash reserves and strong equity and debt markets may all contribute to this. That would likely include this morning’s announcement that Xerox (trading symbol: XRX) wants to acquire HP, the printer business spun off a few years ago from onetime Dow Jones Industrials component Hewlett-Packard.

Another increasingly critical development leading to the mergers and acquisitions trend: The need to maintain America’s technological edge in the face of growing global competition.

The United States losing its research and development (R&#38;D) edge

On key metric of continuing economic success is the steady development of new technologies. In 1960, the United States accounted for over two-thirds of all R&#38;D activity worldwide. Since that time, the total U.S. share of R&#38;D fell to 28% of the total. Even worse, America risks a further R&#38;D as foreign competitors put a strong emphasis on developing new technologies. Or, at times, stealing ours.

Over the past two decades, China has emerged as a global science and technology leader. Since 2000s China’s share of global R&#38;D more than quintupled from 4.9% to 25.1%. At this pace of growth, they could well soon overtake American innovation.

Government deficit soars. Here’s how President Trump will fix it
Along with tighter export controls and patent enforcement by the US government, corporate M&#38;A activities can significantly aid in reversing this trend.

The pooling of corporate resources that corporate mergers generaly provides offers economies of scale to the newly combined entity. This increases capabilities and helps advance technologies while eliminating unnecessary back office overhead. By eliminating the redundancies involved with fixed overhead costs, merged companies can also pass corporate savings can down to consumers in the form of lower prices. The new entity can also leverage some of the savings to fund fast-tracked research and development.

[ ... ]

US tech companies must compete with foreign developments. Likewise America’s defense industry.

In recent years, US defense-related R&#38;D fell from 36% of global R&#38;D to 4% today. That number likely has further to fall, as defense budgets come under additional pressure in future years. To ensure America maintains its edge against foreign adversaries, the Federal government must rely more heavily on contractors and commercial companies to leverage their integrated capabilities for cost-effective innovation.

Naysayers, ranging from the Feds to left-wing anti-capitalists to activist hedge funds increasingly raise anti-trust concerns about big corporate mergers. Federal and socialist M&#38;A opponents argue that by joining together the two companies involved, the new entity removes competition, increasing pricing power and hurting consumers. Hedge funds and other corporate “activists” claim to “seek value” for both their and other stockholders’ portfolios. But their real reason is to scoop large amounts of money from mergers and spinoff activities, enriching themselves while often saddling current or combined entities with crippling debt loads.

But in the current controversy over the RTN and UTX M&#38;A agreement, defense only accounts for 25% of United Technologies’ business. And a mere 1% of the two companies’ sales overlap.

Activist M&#38;A opposition is often detrimental to US economic health

This modus operandi of America’s varied anti-M&#38;A activists often proves devastating to private research and development. One study by the Institute for Governance of Private and Public Organizations (IGOPP), for example, found that after activists held the shares of the companies involved in M&#38;A for a median period of 423 days, funding for R&#38;D was cut by more than half. Another study found that companies, under pressure from activist investors, are defensively making cuts to R&#38;D. This harms long term technological innovation in the economy.

Commonsense mergers acquisitions transactions are essential to corporate dynamism and, as a consequence, to American competitiveness. Every big merger requires appropriate government scrutiny to allay relevant anti-trust concerns. And not all proposed M&#38;A agreements can pass the sniff test.

Deals like the Raytheon-United Technologies merger ensure that America maintains its technological edge. And that remains true in both the commercial and defense sectors.

Read more [1]

[1] https://www.commdiginews.com/business-2/mergers-and-acquisitions-feds-activists-disrupt-us-economic-growth-124436/]]></content>
		<wfw:commentRss>https://igopp.org/en/mergers-and-acquisitions-feds-activists-disrupt-us-economic-growth/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>The Business Roundtable on “The Purpose of a Corporation” Back to the future!</title>
		<link>https://igopp.org/en/the-business-roundtable-on-the-purpose-of-a-corporation-back-to-the-future/</link>
		<comments>https://igopp.org/en/the-business-roundtable-on-the-purpose-of-a-corporation-back-to-the-future/#respond</comments>
		<pubDate>Fri, 20 Sep 2019 18:01:39 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Hedge funds]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Shareholders]]></category>
		<category><![CDATA[Stakeholders]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=11879/</guid>
		<description><![CDATA[In September 2019, CEOs of large U.S. corporations have embraced with suspect enthusiasm the notion that a corporation’s purpose is broader than merely “creating shareholder value”. Why now after 30 years of obedience to the dogma of shareholder primacy and servile (but highly paid) attendance to the whims and wants of investment funds? Simply put, [&#8230;]]]></description>
		<content><![CDATA[In September 2019, CEOs of large U.S. corporations have embraced with suspect enthusiasm the notion that a corporation’s purpose is broader than merely “creating shareholder value”. Why now after 30 years of obedience to the dogma of shareholder primacy and servile (but highly paid) attendance to the whims and wants of investment funds?

Simply put, the answer rests with the recent conversion of these very funds, in particular index funds, to the church of ecological sanctity and social responsibility. This conversion was long acoming but inevitable as the threat to the whole system became more pressing and proximate.

The indictment of the “capitalist” system for the wealth inequality it produced and the environmental havoc it wreaked had to be taken seriously as it crept into the political agenda in the U.S. Fair or not, there is a widespread belief that the root cause of this dystopia lies in the exclusive focus of corporations on maximizing shareholder value. That had to be addressed in the least damaging way to the
whole system.

Thus, at the urging of traditional investment funds, CEOs of large corporations, assembled under the banner of the Business Roundtable, signed a ringing statement about sharing “a fundamental commitment to all of our stakeholders”.

That commitment included:
1. Delivering value to our customers
2. Investing in our employees
3. Dealing fairly and ethically with our suppliers.
4. Supporting the communities in which we work.
5. Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate.

It is remarkable (at least for the U.S.) that the commitment to shareholders now ranks in fifth place, a good indication of how much the key economic players have come to fear the goings-on in American politics. That statement of “corporate purpose” was a great public relations coup as it received wide media coverage and provides cover for large corporations and investment funds against attacks on their behavior and on their very existence.

In some way, that statement of corporate purpose merely retrieves what used to be the norm for large corporations. Take, for instance, IBM’s seven management principles which guided this company’s most successful run from the 1960’s to 1992:

Seven Management Principles at IBM 1960-1992
1. Respect for the individual
2. Service to the customer
3. Excellence must be way of life
4. Managers must lead effectively
5. Obligation to stockholders
6. Fair deal for the supplier
7. IBM should be a good corporate citizen

The similarity with the five “commitments” recently discovered at the Business Roundtable is striking. Of course, in IBM’s heydays, there were no rogue funds, no “activist” hedge funds or private equity funds to pressure corporate management into delivering maximum value creation for shareholders. How will these funds whose very existence depends on their success at fostering shareholder primacy cope with this “heretical nonsense” of equal treatment for all stakeholders?

As this statement of purpose is supported, was even ushered in, by large institutional investors, it may well shield corporations against attacks by hedge funds and other agitators. To be successful, these funds have to rely on the overt or tacit support of large investors. As these investors now endorse a stakeholder view of the corporation, how can they condone and back these financial players whose only goal is to push up the stock price often at the painful expense of other stakeholders?

This re-discovery in the US of a stakeholder model of the corporation should align it with Canada and the UK where a while back the stakeholder concept of the corporation was adopted in their legal framework.

Thus in Canada, two judgments of the Supreme Court are peremptory: the board must not grant any preferential treatment in its decision-making process to the interests of the shareholders or any other stakeholder, but must act exclusively in the interests of the corporation of which they are the directors.

In the UK, Section 172 of the Companies Act of 2006 states: “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, among which the interests of the company's employees, the need to foster the company's business relationships with suppliers, customers and others, the impact of the company's operations on the community and the environment,…”

So, belatedly, U.S. corporations will, it seems, self-regulate and self-impose a sort of stakeholder model in their decision-making.

Alas, as in Canada and the UK, they will quickly find out that there is little or no guidance on how to manage the difficult trade-offs among the interests of various stakeholders, say between shareholders and workers when considering outsourcing operations to a low-cost country.

But that may be the appeal of this “purpose of the corporation”: it sounds enlightened but does not call for any tangible changes in the way corporations are managed.

The author is solely responsible for the views expressed herein.
]]></content>
		<wfw:commentRss>https://igopp.org/en/the-business-roundtable-on-the-purpose-of-a-corporation-back-to-the-future/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>From Amazon to the Financial Times and Trudeau, the big push is underway to ‘reset’ capitalism</title>
		<link>https://igopp.org/en/from-amazon-to-the-financial-times-and-trudeau-the-big-push-is-underway-to-reset-capitalism/</link>
		<comments>https://igopp.org/en/from-amazon-to-the-financial-times-and-trudeau-the-big-push-is-underway-to-reset-capitalism/#respond</comments>
		<pubDate>Fri, 20 Sep 2019 15:29:56 +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[Stakeholders]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/from-amazon-to-the-financial-times-and-trudeau-the-big-push-is-underway-to-reset-capitalism/</guid>
		<description><![CDATA[The old pink lady of Fleet Street made history of sorts this week, donning a yellow front page that contained a five-word declaration that it was pursuing a New Agenda. Despite its reputation and self-declared role as a defender of free markets, the Financial Times of London has frequently flirted with assorted compromises. But nothing [&#8230;]]]></description>
		<content><![CDATA[The old pink lady of Fleet Street made history of sorts this week, donning a yellow front page that contained a five-word declaration that it was pursuing a New Agenda. Despite its reputation and self-declared role as a defender of free markets, the Financial Times of London has frequently flirted with assorted compromises. But nothing matches the big yellow ribbon of newsprint wrapped around the waistline of Wednesday’s edition with a blaring headline that declared:

CAPITALISM. TIME FOR A RESET

Beneath the big black bold type was a much smaller but no less meaningful sub-headline that read: “Business must make a profit but should serve a purpose too.”

The absurdity of that statement deserves comment.

First there’s the logical meaning of the words, which is that making a profit is not a purpose. Here we have one of the world’s leading financial and business papers implying that making a profit is some strange underlying attribute of business that just happens to exist but has no special relevance in the business of running a business.

Never mind that profits are the sole indicator of a healthy and sustainable business enterprise, that profits provide dividends to shareholders and the investment capital that business invests. Profits also set the market price for investment capital and allow business to produce all the products and services that modern corporations deliver to the world’s people.

That’s the other implication of the FT’s slogan about the need to “serve a purpose,” as if all the activities of business are not in themselves purposes, as if all production and services provided by corporations were incidental sidelines that have no purpose: food, clothing, transportation, technology, medical equipment, pharmaceuticals, energy, minerals, financial services, steel, construction materials, forest products, insurance products, retail services, computers, smartphones, media, films, real estate development. None of this comes from government.
In recent months, the plot to overthrow profit maximization and shareholder primacy became more deeply entrenched in the United States and Canada
These are the purposes of what has often been described as the Anglo-American corporate model, a dynamic production machine whose variations have constantly expanded the supply of goods and services to the world’s people, and turned a profit in the process. A good summary description of corporate capitalism’s achievements appeared on this page in Philip Cross’s review [1] of the book Big Business: A Love Letter to an American Anti-Hero.

So what is the Financial Times trying to reset — aside, perhaps, from its own stodgy image as a dreary must-read for the world’s public-sector bureaucrats?

[ ... ]

The Anglo-American shareholder model is often associated with free-market Nobel winner Milton Friedman, who wrote a defining defence of profit maximization back in the 1970s. But Friedman did not invent the model, nor was he the only defender of the idea that shareholders should be paramount.

Two American academics, Henry Hansmann and Reinier Kraakman, wrote in 2001 that “The strongest and clearest claim we make is an ideological or normative claim. It says that there is increasing consensus among the relevant actors, around the globe, that what we term the ‘standard shareholder oriented model’ of the business corporation is the most attractive.”

Under the model, they said “ultimate control over the corporation should rest with the shareholder class” and managers should run the corporation “in the interest of its shareholders.”

Lipton, the New York corporate reform advocate, has been on this theme [2] for some time. He sees the corporate reset to a new paradigm as a sensible response to the extreme corporate makeover proposed by such U.S. Democratic leaders as Elizabeth Warren. The new paradigm may be a steep price to pay for warding off Warren’s radicalism.

Friedman’s contribution was to explain why the principle of shareholder control and profit-seeking should remain paramount. Changing the fundamental purpose of corporations would transform corporate managers [3] into a kind of “public employee or civil servant even though he remains in name an employee of a private enterprise.” Such changes effectively turn undemocratic CEOs and board directors into decision makers to achieve objectives that “cannot be achieved by democratic procedures.”

It may be, as Yvan Allaire argues elsewhere on this page [4], that the corporate governance revolution has little significance and that the new paradigm is benign. But that seems doubtful. The reformers, from the FT’s new yellow agenda to Lipton’s new paradigm, have much greater ambitions.

Read more [5]

[1] https://business.financialpost.com/opinion/philip-cross-capitalism-doesnt-just-make-economies-better-off-it-creates-more-virtuous-people
[2] https://corpgov.law.harvard.edu/2019/02/11/its-time-to-adopt-the-new-paradigm/
[3] https://business.financialpost.com/news/economy/milton-friedman-is-right-profit-is-a-companys-only-purpose
[4] https://business.financialpost.com/opinion/u-s-ceos-embrace-of-stakeholder-model-sounds-enlightened-but-doesnt-offer-any-real-changes
[5] https://business.financialpost.com/opinion/terence-corcoran-tie-a-yellow-ribbon-round-capitalism]]></content>
		<wfw:commentRss>https://igopp.org/en/from-amazon-to-the-financial-times-and-trudeau-the-big-push-is-underway-to-reset-capitalism/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Damages of the short-term mindset</title>
		<link>https://igopp.org/en/damages-of-the-short-term-mindset/</link>
		<comments>https://igopp.org/en/damages-of-the-short-term-mindset/#respond</comments>
		<pubDate>Tue, 06 Aug 2019 19:24:00 +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[Executive compensation]]></category>
		<category><![CDATA[Gouvernance créatrice de valeurs]]></category>
		<category><![CDATA[Hostile takeovers]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/damages-of-the-short-term-mindset/</guid>
		<description><![CDATA[In March 2014, CEOs of many Fortune 500 corporations received a letter that started with these words: “We are preoccupied&#8230; that too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks. We certainly believe that returning cash to shareholders should be part of a balanced capital strategy; however, when [&#8230;]]]></description>
		<content><![CDATA[In March 2014, CEOs of many Fortune 500 corporations received a letter that started with these words:

“We are preoccupied... that too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks. We certainly believe that returning cash to shareholders should be part of a balanced capital strategy; however, when done for the wrong reasons and at the expense of capital investment, it can jeopardize a company’s ability to generate sustainable long-term returns.

This was not written by a socialist economist, but by Larry Fink [1], president and CEO of BlackRock, arguably the largest investment firm in the world.

Fink is a powerful voice in the ongoing concern with the “tyranny of the short-term mindset” that, according to many commentators, plagues both Wall Street and Main Street. Another was Vanguard founder John Bogle, who said that “we have ceased to be investors and have become speculators”, and even devoted his last book to the subject (The Clash of the Cultures: Investment vs. Speculation, John Wiley &#38; Sons, 2012).

Yvan Allaire, president of the Institute for Governance of Private and Public Organizations, in Montreal, defines "short-termism" as “the conscious decision on the part of management to take measures that will have a positive effect on share price in a near future, even while knowing very well that such measures can eventually harm the long-term well-being of the corporation.”

In financial markets, the most visible form of short-termism hinges on the average time investors hold on to shares, which has shrunk from 97 months, in 1950, to 7 months in 2010. However, that shortened holding period can be overly influenced by computer trading volumes, acknowledges Allaire.

[ ... ]

“Corporations should get their capital from an IPO and then concentrate on their core business of product, market and human resources development,” says Samuelson adding that linking executive pay to the stock price causes the separation line between two very distinct markets to blur. ”Another unfortunate outcome of linking pay structure to shares is that “it tempts CEOs to sell their company, and profit from it,” Allaire notes.

Apart from severing links between executive pay and share price evolution, Samuelson and Allaire put forward two measures that could help correct short-termism. a) Before having the right to vote, an investor should hold on to his shares for at least one year. The present state of things is the equivalent of allowing tourists and temporary visitors to vote for a country’s government, highlights Allaire. b) The longer an investor holds onto his shares, the lower should the capital gains tax be.

Read more [2]

[1] https://www.reuters.com/article/us-blackrock-dividends/blackrock-ceo-to-us-companies-dont-overdo-divs-buybacks-idUSBREA2P1C820140326
[2] https://igopp.org/wp-content/uploads/2019/08/YBarcelo_Damages-of-the-short-term-mindset_Morningstar_August-2019.pdf]]></content>
		<wfw:commentRss>https://igopp.org/en/damages-of-the-short-term-mindset/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Theory, Evidence, and Policy on Dual-Class Shares: A Country- Specific Response to a Global Debate</title>
		<link>https://igopp.org/en/theory-evidence-and-policy-on-dual-class-shares-a-country-specific-response-to-a-global-debate/</link>
		<comments>https://igopp.org/en/theory-evidence-and-policy-on-dual-class-shares-a-country-specific-response-to-a-global-debate/#respond</comments>
		<pubDate>Tue, 18 Jun 2019 18:56:05 +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[Actions multivotantes]]></category>
		<category><![CDATA[Dual-class shares]]></category>
		<category><![CDATA[Gouvernance créatrice de valeurs]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/theory-evidence-and-policy-on-dual-class-shares-a-country-specific-response-to-a-global-debate/</guid>
		<description><![CDATA[Dual-class shares have become one of the most controversial issues in today´s capital markets and corporate governance debates around the world. Namely, it is not clear whether companies should be allowed to go public with dual-class shares and, if so, which restrictions (if any) should be imposed. Three primary regulatory models have been adopted to [&#8230;]]]></description>
		<content><![CDATA[Dual-class shares have become one of the most controversial issues in today´s capital markets and corporate governance debates around the world. Namely, it is not clear whether companies should be allowed to go public with dual-class shares and, if so, which restrictions (if any) should be imposed.

Three primary regulatory models have been adopted to deal with dual-class shares:

 	(i) prohibitions, existing in countries like the United Kingdom, Germany, Spain, Colombia, or Argentina;
 	(ii) the permissive model adopted in several jurisdictions, including Canada, Sweden, the Netherlands, and particularly the United States; and
 	(iii) the restrictive approach recently implemented in Hong Kong and Singapore.

This paper argues that, despite the global nature of this debate, regulators should be careful when analysing foreign studies and
approaches, since the optimal regulatory model to deal with dual-class shares will depend on a variety of local factors. It will be argued that, in countries with sophisticated markets and regulators, strong legal protection to minority investors, and low private benefits of control, regulators should allow companies going public with dual-class shares with no restrictions or minor regulatory intervention (e.g., eventbased sunset clauses).

[ ... ]

65 Yvan Allaire, Enough with the Shibboleth on Dual Class of Shares, Le MÉDAC (2016), pp 3 (available at
https://medac.qc.ca/documentspdf/articles/2016-05_yvan_allaire_vote_multiple_anglais.pdf) [1].

&#160;

To read the complete study, please click here [2].

[1] https://medac.qc.ca/documentspdf/articles/2016-05_yvan_allaire_vote_multiple_anglais.pdf)
[2] https://igopp.org/wp-content/uploads/2019/06/Gurrea-Martinez-2019.pdf]]></content>
		<wfw:commentRss>https://igopp.org/en/theory-evidence-and-policy-on-dual-class-shares-a-country-specific-response-to-a-global-debate/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Short-term thinking forcing companies to delay IPOs, opt for dual-class shares: Governance expert</title>
		<link>https://igopp.org/en/short-term-thinking-forcing-companies-to-delay-ipos-opt-for-dual-class-shares-governance-expert/</link>
		<comments>https://igopp.org/en/short-term-thinking-forcing-companies-to-delay-ipos-opt-for-dual-class-shares-governance-expert/#respond</comments>
		<pubDate>Tue, 14 May 2019 14:03:06 +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[Activism]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Dual-class shares]]></category>
		<category><![CDATA[Gouvernance créatrice de valeurs]]></category>
		<category><![CDATA[Head offices]]></category>
		<category><![CDATA[Hedge funds]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/short-term-thinking-forcing-companies-to-delay-ipos-opt-for-dual-class-shares-governance-expert/</guid>
		<description><![CDATA[Yvan Allaire, executive chair at the Institute for Governance of Private and Public Organizations, joins BNN Bloomberg to discuss &#8220;quarterly capitalism&#8221; in light of WestJet CEO Ed Sims’ warning on the destruction it brings to long-term company plans. To watch this interview, please click here. &#160;]]></description>
		<content><![CDATA[Yvan Allaire, executive chair at the Institute for Governance of Private and Public Organizations, joins BNN Bloomberg to discuss "quarterly capitalism" in light of WestJet CEO Ed Sims’ warning on the destruction it brings to long-term company plans.

To watch this interview, please click here. [1]

&#160;

 [2]

[1] https://www.bnnbloomberg.ca/video/short-term-thinking-forcing-companies-to-delay-ipos-opt-for-dual-class-shares-governance-expert~1683258
[2] https://www.bnnbloomberg.ca/video/short-term-thinking-forcing-companies-to-delay-ipos-opt-for-dual-class-shares-governance-expert~1683258]]></content>
		<wfw:commentRss>https://igopp.org/en/short-term-thinking-forcing-companies-to-delay-ipos-opt-for-dual-class-shares-governance-expert/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Dual-class shares are hot in the U.S. again : Canada should join in</title>
		<link>https://igopp.org/en/dual-class-shares-are-hot-in-the-u-s-again-canada-should-join-in/</link>
		<comments>https://igopp.org/en/dual-class-shares-are-hot-in-the-u-s-again-canada-should-join-in/#respond</comments>
		<pubDate>Wed, 06 Mar 2019 20:31:30 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Dual-class shares]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=10939/</guid>
		<description><![CDATA[American fund managers are freaking out about the popularity of multiple voting shares among entrepreneurs going for an initial public offering (IPO). In recent years, some 20 per cent of American IPOs (and up to a third among tech entrepreneurs) have adopted a dual-class structure. Fund managers are working overtime to squelch this trend. In [&#8230;]]]></description>
		<content><![CDATA[American fund managers are freaking out about the popularity of multiple voting shares among entrepreneurs going for an initial public offering (IPO). In recent years, some 20 per cent of American IPOs (and up to a third among tech entrepreneurs) have adopted a dual-class structure. Fund managers are working overtime to squelch this trend.

In Canada, this form of capital structure has been the subject of unrelenting attacks by some fund managers, proxy-advisory firms and, to a surprising degree, by academics. Some 69 dual-class companies are now listed on the Toronto Stock Exchange, down from 100 in 2005. Since 2005, only 23 Canadian companies went public with dual-class shares and 16 have since converted to a single-class.

A dual class of shares provides some measure of protection from unwanted takeovers as well as from the bullying that has become a feature of current financial markets. (The benefits of homegrown champions, controlled by citizens of the country and headquartered in that country need no elaboration. Not even the U.S. tolerates a free-for-all takeover regime, but Canada does!)

These 69 dual-class companies have provided 19 of Canada’s industrial champions as well as 12 of the 50 largest Canadian employers. The 54 companies (out of the 69 that were listed on the TSX 10 years ago) provided investors with a mean annual compounded return of 8.98 per cent (median 9.62 per cent) as compared to 5.06 per cent for the S&#38;P/TSX Index and 6.0 per cent for the TSX 60 index (as per calculations by the Institute for Governance of Private and Public Organizations).

As for the quality of their governance, by the standards set by The Globe and Mail for its annual governance scoring of TSX-listed companies, the average governance score of companies without a dual-class of shares is 66.15 while the score of companies with multiple voting shares, once the penalty (up to 10 points) imposed on dual-class companies is removed, is 60.1, a barely significant difference.

The opposition to dual-class of shares usually rests on three arguments.

Multiple voting shares are undemocratic.

One share/one vote becomes the equivalent of the hallowed “one person/one vote” precept of democratic political system (a relatively recent achievement, it should be pointed out).

For all its superficial plausibility, the argument is hollow. The equivalent of “one person/one vote” to the domain of shareholding would be “one shareholder/one vote” irrespective of the number of shares a shareholder actually owns. Indeed, in political democracies, citizens do not acquire more voting rights because they pay more taxes to the government.

The analogy of shareholding with citizenship falters in other respects: short-term “tourist” shareholders should not get to vote for the same reason tourists who happen to be in a country on voting day cannot claim voting rights; and then, “newcomers” to the shareholding of a company would have to wait for a significant period of time before acquiring “citizenship” and the right to vote as is the case for immigrants, even those employed and paying taxes. Clearly this argument cannot be taken seriously.

They make management and boards relatively impervious to the will, wishes and whims of shareholders.

Nowadays, institutional shareholders, ETFs and pension funds hold sizeable positions in most publicly traded companies. These shareholders want to be heard and listened to. They often lament the fact that their influence is constrained when companies have adopted a dual class of shares and/or are controlled by a shareholder or related shareholders.

Up to a point, that is a valid argument. But it supposes that shareholders are the only relevant constituency for a publicly listed corporation; though some still parrot that notion, the Supreme court of Canada has on two recent occasions made it clear that all stakeholders must be considered by a board of directors acting in the interest of the corporation.

Dual-class companies do not perform as well for shareholders as single-class companies. 

Empirical studies do not offer a compelling support for that thesis; indeed, it may tilt the other way as numerous comparisons have demonstrated.

For instance, the results of recent, large-scale American studies point to the longer survival and lower takeover activity of dual-class firms, a valuation premium for dual-class shares over single-class firms, which is maintained for six to nine years after an IPO, and the finding that dual-class companies are better operating performers than their single-class firms in a matched sample.

Not only is there growing evidence of their better economic performance, but the coupling of dual-class and family ownership brings about longer survivorship, better integration in the social fabric of host societies, less vulnerability to transient shareholders and more resistance to strategic and financial fashions.

Of course, this form of control must come with appropriate measures to ensure and protect the rights of minority shareholders. Most Canadian dual-class companies are well aware of that requirement and have put in place state-of-the-art governance.
]]></content>
		<wfw:commentRss>https://igopp.org/en/dual-class-shares-are-hot-in-the-u-s-again-canada-should-join-in/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Yvan Allaire makes &#8220;The Case for Dual-Class of Shares&#8221;</title>
		<link>https://igopp.org/en/yvan-allaire-makes-the-case-for-dual-class-of-shares/</link>
		<comments>https://igopp.org/en/yvan-allaire-makes-the-case-for-dual-class-of-shares/#respond</comments>
		<pubDate>Fri, 15 Feb 2019 18:41:10 +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[Dual-class shares]]></category>
		<category><![CDATA[Shareholders]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/yvan-allaire-makes-the-case-for-dual-class-of-shares/</guid>
		<description><![CDATA[Allaire, Yvan, The Case for Dual-Class of Shares (December 20, 2018). Available at SSRN: https://ssrn.com/abstract=3318447 or http://dx.doi.org/10.2139/ssrn.3318447 The debate over whether dual class of shares increases or decreases share value, should be prohibited or not, should be subjected to mandatory sunset provisions, and so on has been heating up over the last few years. This paper reviews the [&#8230;]]]></description>
		<content><![CDATA[Allaire, Yvan, The Case for Dual-Class of Shares (December 20, 2018). Available at SSRN: https://ssrn.com/abstract=3318447 [1] or http://dx.doi.org/10.2139/ssrn.3318447 [2]

The debate over whether dual class of shares increases or decreases share value, should be prohibited or not, should be subjected to mandatory sunset provisions, and so on has been heating up over the last few years. This paper reviews the pros and cons of dual class of shares in light of more recent empirical results of (mostly) American studies. The paper surveys the evolution of dual-class companies in the Canadian context and makes a number of recommendations to enhance the usefulness of this type of capital structure and protect the rights of minority shareholders.

The paper comes out against time-based sunset clauses but supports the obligation for dual-class companies to adopt a “coattail” provision, as is the case in Canada, which provision ensures that all shareholders will have to be offered the same price and conditions should the controlling shareholder decide to sell its controlling stake in the company. The paper also recommends that separate tallies of vote results be made public for each class of shares and that a third of board members be elected by shareholders with “inferior” voting rights.

Not only is there growing evidence of their better economic performance but the coupling of dual class and family ownership brings about longer survivorship, better integration in the social fabric of host societies, less vulnerability to transient shareholders and more resistance to strategic and financial fashions.

This precious form of ownership must come with appropriate measure to ensure and protect the rights of minority shareholders.

Read more [3]

[1] https://ssrn.com/abstract=3318447
[2] https://dx.doi.org/10.2139/ssrn.3318447
[3] https://igopp.org/wp-content/uploads/2019/02/Yvan-Allaire-makes-_The-Case-for-Dual-Class-of-Shares_-ProfessorBainbridge.com_February-2019.pdf]]></content>
		<wfw:commentRss>https://igopp.org/en/yvan-allaire-makes-the-case-for-dual-class-of-shares/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Are Independent Board Members Necessarily Credible?</title>
		<link>https://igopp.org/en/are-independent-board-members-necessarily-credible/</link>
		<comments>https://igopp.org/en/are-independent-board-members-necessarily-credible/#respond</comments>
		<pubDate>Wed, 08 Aug 2018 18:46:15 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Financial crisis]]></category>
		<category><![CDATA[Independence of Board members]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/are-independent-board-members-necessarily-credible/</guid>
		<description><![CDATA[By the late 2000s, independent directors were in the majority on the boards of almost every type of U.S. organization. While this achievement may have improved corporate governance, it was not the panacea that some had anticipated, as subsequent events like the financial crisis of 2008 brought down even some of the best governed corporations. [&#8230;]]]></description>
		<content><![CDATA[By the late 2000s, independent directors were in the majority on the boards of almost every type of U.S. organization. While this achievement may have improved corporate governance, it was not the panacea that some had anticipated, as subsequent events like the financial crisis of 2008 brought down even some of the best governed corporations.

The tragic fate of Lehman Brothers, which declared bankruptcy on September 15, 2008, the triggering event of the financial crisis, illustrates the limitations of independent board members. Lehman's board of directors, typical for the time, was made up of independent people, many of whom were ex-CEOs of large corporations like IBM, GlaxoSmithKline, Haliburton, Telemundo Group, and Sotheby’s.

The board made its decisions on the basis of the members’ experience, which had little relevance to the business of Lehman, an investment bank and a large trading operation that dealt with complex financial products.

The report of the examiner appointed by the bankruptcy court to determine the responsibility of Lehman's board of directors for the bank’s collapse (the Jenner &#38; Block Report) is instructive. For the board meeting on March 20th, 2007 at which a fateful decision was made about Lehman’s larger financial commitment to the sub-prime mortgage market, the people responsible for preparing a presentation for the president of Lehman exchanged e-mails conveying his expectations. One e-mail read:

Board is not sophisticated around subprime market- Joe [the president of Lehman] doesn’t want too much detail. He wants to candidly talk about the risks to Lehman but be optimistic and constructive – talk about the opportunities that this market creates and how we are uniquely positioned to take advantage of them (Jenner &#38; Block Report, p.90).

Later in the report, the examiner wrote:

Although Lehman’s management did not provide the Board with all available information concerning the risks faced by the firm in 2007 and early 2008, that fact is not surprising given the Board’s limited role in overseeing the firm’s risk management, and the extraordinarily detailed information available to management. (Jenner &#38; Block Report, p. 185).

Thus, a board made up of independent members with impressive biographies is not ipso facto credible. This helps explain why corporate governance falls short at too many organizations.

A board's credibility rests ultimately with management’s assessment of the board: does the management feel that the board understands in depth their strategic choices, the real drivers of performance, the complexity and ramification of proposed decisions? Do the members of the management team feel that discussions with the board are productive and stimulating, bring out new viewpoints and add value to the decision-making process? A board of directors is only credible to the extent that a significant number of its members are able to interact knowledgeably with management on the multiple factors that influence performance. This type of exchange calls for a board’s deep and systemic understanding of the company’s business model.

That’s why so many experienced, real-world, observers of corporate governance have begun to advocate "specific competence" and "understanding the company's business model." (See, for example, William, 2013; Bailey and Koller, 2014; and Lorsch et al., 2012, The Future of Governance).

Having interviewed 78 board members of large U.S. companies, Jay W. Lorsch, professor at the Harvard Business School, reported that they, unanimously or nearly so, said boards must significantly enhance their skills, and lamented "the huge deficits in expertise and understanding of the business."

The more complex a business is, the more important it is that the board can count on directors who are well versed in the arcane aspects of its operations, although it may be at the price of their independence.

Lorsch concludes that "It is difficult, if not impossible, to find directors who possess deep knowledge of a company’s process, products, and industries who can also be considered independent."

The current, conventional, approach to selecting board members consists of drawing up a list of the different types of professional expertise that would serve the company well. The search also includes a number of retired or active senior managers from diverse corporations. This process will not necessarily lead to a credible board, because the senior managers selected too often lack experience in the business sectors where the company to be governed operates.

The selection process should begin by identifying industries with characteristics in common with the industry in which the target company operates. Those characteristic should include capital intensity, time horizon of investments, industrial vs. consumer markets, international scope of competition, key success factors, and generic strategies. Executives with experience in such industries will more quickly master the essential aspects of the company while also qualifying as independent, thus reconciling independence with credibility.

This approach should also apply to the selection of a director with, say, an expertise in finance. The selection process should stress that candidates must have experience acquired in an industry with characteristics similar to those of the target company’s industry. There is very little transferable expertise, whether in financial management, human resources, risk management, or information technology, among a retail business, a resources company, a financial institution, and a firm in the aerospace/defense industry.

If new board members lack credibility, then the board must determine whether they have committed to investing the time necessary to develop it and, have the necessary education and intellect and whether the board itself has created programs to enhance the credibility of new members.

A board’s credibility is the cornerstone of effective governance. Thus, the search for, training, and retention of credible board members has become the dominant issue and inescapable challenge for corporate governance in the 21st century.
]]></content>
		<wfw:commentRss>https://igopp.org/en/are-independent-board-members-necessarily-credible/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
	</channel>
</rss>
