Abstract

http://ssrn.com/abstract=2362031
 


 



Sustainable Companies Through Enlightened Boards: Combining Private and Public Interest in the Decision-Making of Large Public Firms


Vincenzo Bavoso


University of Manchester - School of Law; Durham University - Durham Law School

December 1, 2013

European Company Law, APRIL 2014, VOLUME 11, ISSUE 2

Abstract:     
This paper identifies two main corporate governance problems that have persisted for over a decade in the UK (and more generally within Anglo-American corporate law contexts). The first is represented by flawed systems of control (both internal and external) over managerial behaviour. The second problem is reflected in the unresolved dilemma of the corporate objective whose urgency is magnified by the application of shareholder value as the parameter of corporate success. It is also asserted that these problems resulted from fundamental weaknesses in the governance system, namely the lack of necessary competences within board of directors (BoDs) and the effective independence of its members, whose intellectual bias impaired the balancing of different interests.

The paper highlights the need to redesign the structure of the BoDs in large public firms. It posits that structural changes are needed to recalibrate key decision-making processes in order to align them with more socially inclusive and sustainable goals. To achieve this, a new governance structure is advocated, encompassing an “enlightened” participation of the State in BoDs which would provide democratic legitimacy to corporate decision-making.

It is suggested that the inclusion of a public interest component in BoDs should occur via the State, which is identified as ultimate guardian of social interests because of its democratic underpinning. This public element would contribute to legitimising managerial power within society. More practically, it would constitute an ex ante mechanism to determine the firm’s corporate objective and it would provide a gatekeeping function over decisions that have a negative impact on social interests.

Number of Pages in PDF File: 6

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Date posted: December 2, 2013 ; Last revised: March 14, 2014

Suggested Citation

Bavoso, Vincenzo, Sustainable Companies Through Enlightened Boards: Combining Private and Public Interest in the Decision-Making of Large Public Firms (December 1, 2013). European Company Law, APRIL 2014, VOLUME 11, ISSUE 2. Available at SSRN: http://ssrn.com/abstract=2362031 or http://dx.doi.org/10.2139/ssrn.2362031

Contact Information

Vincenzo Bavoso (Contact Author)
University of Manchester - School of Law ( email )
Manchester M13 9PL
United Kingdom
Durham University - Durham Law School ( email )
The Palatine Centre
Stockton road
Durham, DH1 3LE
United Kingdom
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