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Personal liability is the means of deterring repeat offences of corporate...
Rolls Royce's recent “deferred prosecution agreement” shows again that senior executives appear not to mind paying out large amounts of shareholders’ money to escape any personal liability for their actions.
Reflection on the Kay Review and corporate governance
John explains the one thing he'd do if he could now revise the Kay Review of UK Equity Markets and Long-term Decision Making and identifies ways to improve corporate governance.
Stakeholders with the most to lose should control struggling companies
When a corporation is unable to meet valid claims, control passes to the holders of these claims in a legally defined order of priority. But, as finance has grown more complex, these rules have come to look more shaky; they can falter dangerously in modern banking or in the case of a struggling retail business such as BHS.
Berkshire business model is simple and effective, yet rarely copied
Buffett's method is to find well-run companies and give them more freedom than they would enjoy on public markets. Yet other conglomerates use financial engineering and impose “transferable” management skills.
UK invites more bank failures by backtracking on executive liability
The Parliamentary Commission on Banking Standards, which reported in 2013, recognised the central significance of executive responsibility for systemic failure in the sector. It proposed a senior managers regime which would hold executives liable for wrongdoing in activities for which they had responsibility even if they had no specific knowledge of the improper conduct. Having accepted this recommendation, the UK government is now backtracking.
HBOS report yields three important lessons for all businesses
British regulators have finally published their report into HBOS, the bank formed from the merger of Halifax with Bank of Scotland, more than seven years after its collapse. The 600-odd pages contain much detail on events and personalities. But there are general lessons for all businesses. Avoid the diversifier’s fallacy. Beware the winner’s curse. Fear adverse selection.
Organisations advance by asking “what went wrong” rather than “who is...
Bad events in organisations are generally the product of bad systems rather than bad people. So, while it is right to place responsibility for the VW scandal with the chief executive rather than the individuals who falsified emissions tests, we need to go on and ask what it is about modern corporate life that has made such misbehaviour not only possible but appear increasingly common.
Let’s challenge our fixation on the principle of one share, one...
The Savoy Group and Google both adopted share structures that give individuals disproprtionately greater voting rights than their diverse set of shareholders. It has worked well for these companies and their investors over the long run. Perhaps we should reopen the debate over share structures?
Rail privatisation has delivered improvements through accountability and autonomy
Both the leading candidates for the leadership of Britain’s opposition Labour party have now committed themselves to renationalising the country’s railways. But the state-owned British Rail was one if the most reviled institutions in the UK, and privatisation has delivered many relative benefits.
The wisest choices depend on instinct and careful analysis
We have a large consultancy business of transport modellers, environmental experts, risk managers and impact assessment modellers, the front line of an army that has turned evidence-based policy into policy-based evidence.