85. Can regulations make corporate governance better?

What this episode covers

SCRIPT I’ll start with the disclaimer that I am very much in favour of corporate regulations in general. By my subjective assessment, every time there’s universal hand-wringing about increased regulation it turns out to be at least a little overblown. Nonetheless, most of the corporate governance regulations I’m familiar with miss the mark. In fact, I would argue in some cases that they’re not even ABOUT GOVERNANCE, even if they happen to impact boards of directors. Instead, they’re about disclosure, reporting, compliance, and other general box-ticking. When the regulations *do* in fact affect organizational decision-making, they seem not to be at all concerned about whether they do so in a positive way. I discussed how unconvinced I am about independence regulations way back in the early days of the OMG podcast, and I still feel the same. If you’re curious, take some time to skim through the corporate governance codes in your jurisdiction and ask yourself “how are these rules actually helping organizational leaders to make better decisions?” In some cases you might find yourself wondering how a board could possibly put in the effort to meet all the regulatory requirements and still have time to actually be useful to their organizations. I’m not trying to dump too hard on the regulators here – or the institutional shareholders that influence them – but I personally think they could do a better job at managing governance risk if they acknowledged that governance is more about people than it is about structure and rules.