On 1 June this year, Japan introduced a new governance code, which requires companies to appoint at least two external directors, amongst other elements. Shinzo Abe, the Japanese prime minister, wants to encourage boardrooms to boost the economy by using the US$1.9trillion in cash at their disposal to boost investment or wages, or return some to investors.
This is a big deal in a country which has never before laid down rules on how firms should conduct their affairs. Set against this backdrop of growing international interest and scrutiny, we set out to explore how three aspects of corporate governance are affecting companies across the globe, drawing on close to 2,000 interviews with board directors and business management teams. Firstly we explore the role of culture which, while intangible and hard to measure, remains the cornerstone of good governance. We look at the role of the board and management team in building and demonstrating it, and how a good governance culture can be nurtured. Secondly we look at board composition. The dangers of ‘groupthink’ and the benefits of greater diversity are widely accepted so we explore the implications for boards and look at how they can access the right skills to help their company to thrive. Finally we consider strategic planning. We asked board members for their views on what they consider to be an appropriate planning time horizon, and the possible conflict
of interest between executive compensation and longer term company performance. At Grant Thornton we believe that while compliance with laws
and regulations must form part of any governance framework, there is an opportunity for progressive boards to frame these issues more broadly. This includes promoting a culture of integrity and ethics, tapping into key takeholder groups and maintaining a rich diversity of thinking that blends industry experience with challenging debate. We therefore promote good
governance as a critical element of effective capital markets. For example, Grant Thornton UK has been conducting a survey of governance in the FTSE350 for more than ten years, expertise which has been used to inform successive iterations of the Financial Reporting Council’s UK Corporate Governance Code. Grant Thornton member firms in other countries such as Australia, India, Greece, and the United States also publish periodic governance reviews. The global viewpoints shared in this report provide a fresh perspective on establishing the right governance for growth in your business.
- Board composition
- Strategic planning
- Why Grant Thornton
- Key contacts