I finally managed to finish off Political Power and Corporate Control, which was well worth a read. It brings a much-needed political perspective to corporate governance, and as I have said before it's good to see a governance book take seriously the role of labour. It also sketches out why workers in liberal market economies might end up in a 'transparency coalition' with investors. This has happened in the US - unions are major players in shareholder activism - but has yet to take off here in the UK, which is something I'll come back to in a post another day.
Also I can't resist a quote from the very last page of the book where the authors comment on the changing rhetoric adopted in governance debates -
"[W]hen managers fail to perform and make money for the shareholders, these managers often embrace broader rhetorical notions of accountability, ranging from employment stability to 'sustaniable' management, to 'serving our stakeholders' rather than mere investors. But when presented with efforts to change the rules of corporate governance to make them more accountable to strictly profit-making definitions of responsibility to shareholders, these same managers go the other way, embracing narrow rhetorical notions of corporate governance as a strictly economic function - suggesting that goverance reforms risk 'politicizing' the way firms are run, and thereby open the door to rent-seeking lawyers, bureaucratic meddling, and 'populist' forces interested in social agendas, not profit."
I presume the authors are mainly influenced by the US market in their comments here, and the debate over proxy access has seen many of these arguments trotted out (including a really awful editorial in the Wall Street Journal suggesting it was a union plot to get their people into the boardroom - if only it were that simple!). But it is also true of the UK, and not just of company management. More than once I have heard people claim that TU activity in respect of fund manager transparency is 'politicizing' investment management. Funnily enough, it's always opponents of the status quo who are 'political', whilst its defenders are not.