corporate governance ratings and social media harvard university, boston, ma august 7, 2012, 3:15...
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Corporate Governance Ratings and Social MediaHarvard University, Boston, MAAugust 7, 2012, 3:15 – 6:15 pm
Richard Leblanc, PhDAssociate Professor, Law, Governance & Ethics, York University
MGMT 5018Corporate Governance
Copyright © 2011 Richard Leblanc.
All rights reserved.
Corporate Governance Ratings2
Third-party ratings and credit rating agencies as examples;
Governance ratings: RiskMetrics/ISS, GMI, TCL;
Concerns:
Lack of disclosure of methodology, weightings;
Governance quality;
Predictive validity;
Company circumstances and qualitative data;
Copyright © 2011 Richard Leblanc.
All rights reserved.
Corporate Governance Ratings, continued3
Concerns, continued:
Same company, different ratings - ?
Same rating agency, different proxy recommendations - ?
Market concentration
Conclusion: companies should not implement governance changes to increase their ranking (but they do);
Copyright © 2011 Richard Leblanc.
All rights reserved.
Academic research4
Similar conclusions with “G” and “E” Indexes;
Anti-takeover and entrenchment focus;
Certain time periods, computations and industries;
Mixed empirical research;
Non-uniform standards; lack of qualitative approach, and context;
Publicly available data vs inside the boardroom, individuals, reporting, culture;
Copyright © 2011 Richard Leblanc.
All rights reserved.
SM & Governance: “Power of a Single Tweet” 5
Exponentially interconnected;
Brand, reputation, ICs;
Email, press clippings slow, limiting, outdated;
Independent analytics (2 ex.);
“Communications, IR, public policy, SM”;
Gender/age effects (ex.);
Copyright © 2011 Richard Leblanc.
All rights reserved.
Boardroom Technology – Trends & Touchpoints5
Browsers eclipsed by “ipads overwhelming winner, with no close second” – “86% of Fortune 500” (WSJ);
Paperless boardroom (example) 3-9 month hybrid;
Offline encrypted storage; Remote purging (browser cannot do);
To come: written consent, annotation of comments, highlighting of text; voice recognition; “gestures” (no mouse);
Director experience: interactive dashboard with collaboration, mobility, security, transparency;
Copyright © 2011 Richard Leblanc.
All rights reserved.
SM & Governance: “Power of a Single Tweet” 6
Exponentially interconnected;
Brand, reputation, ICs;
Email, press clippings slow, limiting, outdated;
Independent analytics (2 ex.);
“Communications, IR, public policy, SM”;
Gender/age effects (ex.);
Copyright © 2011 Richard Leblanc.
All rights reserved.
Social Media and Boards, continued (+reading)7
Analytics – leading indicators and early warning (two bank examples, Eli Lilly, Nestle, Qantus - Flora)
Risk management (operations, reputation, compliance, emerging risks);
Concerns: micro management?
Relying on management?
Accuracy of information?
Engaging directly with shareholders, other stakeholders?
Who is in administering social media (seniority)?
Copyright © 2011 Richard Leblanc.
All rights reserved.
Social Media and Boards, continued (+reading)8
Passwords?
Who owns the connections?
Code of conduct and SM policy;
Crisis and response planning (Qantus example – $80M) and accuracy;
A picture can harm (FedEx, Comcast, TTC): immediacy and pervasiveness;
SM is two way (BP and blockage);
Copyright © 2011 Richard Leblanc.
All rights reserved.
Board Dynamics Study: Boardrooms of the future9
Copyright © 2011 Richard Leblanc.
All rights reserved.
Board Dynamics Study 10
100+ diverse directors – question / focus areas:
Board Dynamics
Board-Management Relationship
Undue Influence
IT & Reporting
Director Behaviour
CEO Posture
Chair Leadership
Recent Columbia/Delaware study
Copyright © 2011 Richard Leblanc.
All rights reserved.
Red Flags 11
Bully CEO; Disengaged Directors; Cliques / factions; Weak Chair; Board denial; Body language; Undue influence over compensation; Inadequate risk, internal controls; Lack of / ineffective Internal Audit;
Copyright © 2011 Richard Leblanc.
All rights reserved.
Red Flags, continued 12
Integrity and information/transparency issues;Stakeholder Directors;Micro-Managing Directors;Tone at top and ethical reporting;Poor CEO / executive succession planning;Non renewal of Directors;Happy face questionnaires; and
Lack of governance disclosure and transparency;
Copyright © 2011 Richard Leblanc.
All rights reserved.
Emerging Themes ~ Enhancing Dynamics 13
Structured Engagement – GE Board / Canadian example;
“Office of the Board” – other NYSE Example;
Leadership skills and industry knowledge of the Chair;
Dominant CEOs;
Problematic directors;
Diversity considerations; “chemistry”;
Copyright © 2011 Richard Leblanc.
All rights reserved.
“Comply or Explain” Regime 14
Source: Basel (May 10), Europe (Dec 10) and FDIC (Feb 11)
CSA Staff Notice 58-306 (Dec10): “unacceptable”;
EU Submission
Copyright © 2011 Richard Leblanc.
All rights reserved.
Thank you and Good Luck on the Final! 14
Copyright © 2011 Richard Leblanc.
All rights reserved.
Contact Information
Professor Richard LeblancFaculty of Liberal Arts & Professional StudiesYork Universitytel: (416) 736-2100 x 33744Email: [email protected]
Twitter: http://twitter.com/DrRLeblanc
Blog:
http://www.canadianbusiness.com/author/richardleblanc
http://ca.linkedin.com/in/rwleblanc
LinkedIn Group: Board Advisors
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