The Limitations of Corporate Governance Best Practices

Turnbull, Shann 2012. The Limitations of Corporate Governance Best Practices. In The Sage handbook of CORPORATE GOVERNANCE, Thomas Clarke and Douglas Branson, eds., Chapter 19, 428-449, Sage: London & Thousand Oaks, CA.

22 Pages Posted: 11 Apr 2011 Last revised: 19 May 2012

See all articles by Shann Turnbull

Shann Turnbull

International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance

Date Written: April 1, 2011

Abstract

This chapter identifies the limitations of what may commonly be accepted as “Best Practices” in Corporate Governance. Directors commonly obtain funds from venture capitalists and bankers by transferring to them some or all of their absolute powers that can corrupt themselves and their business. This provides evidence that the law, regulators, stock exchanges and corporate governance codes are irresponsible in allowing directors to possess corrupting powers, not required to increase profits, when firms becomes publicly traded. Neither common sense nor empirical evidence provides compelling evidence to support many existing practices and those advocated by numerous corporate governance codes. Many current practices are identified in this chapter as being: unethical, imposing risks for both directors and the firm as well as denying competitive advantages or consistency with the rationale for a market economy.

Compelling reasons why existing practices are sub-optimal are revealed by the communication and control architecture found in living things that like firms must self-regulate to survive and grow in complex uncertain environments. The natural science of governance identifies: (a) why current practices can be counter productive; (b) how the need for codes can be eliminated; (c) how corporate law can be simplified; (d) how the size of regulators can be reduced while increasing their effectiveness; (e) how the interest of investors, stakeholders and the community can be protected, and (f) how the interventions by government in business can be reduced.

Keywords: Best Practices, Corporate Governance, Cybernetics, Network governance, Self-governance

JEL Classification: D02, D21, D23, D72, D74, D83, D85, G34, K22, L22, L25

Suggested Citation

Turnbull, Shann, The Limitations of Corporate Governance Best Practices (April 1, 2011). Turnbull, Shann 2012. The Limitations of Corporate Governance Best Practices. In The Sage handbook of CORPORATE GOVERNANCE, Thomas Clarke and Douglas Branson, eds., Chapter 19, 428-449, Sage: London & Thousand Oaks, CA.. Available at SSRN: https://ssrn.com/abstract=1806383

Shann Turnbull (Contact Author)

International Institute for Self-Governance ( email )

PO Box 266 Woollahra
Cell: +61418222378
Sydney, New South Wales 1350
Australia
+61293278487 (Phone)
+61280655905 (Fax)

HOME PAGE: http://independent.academia.edu/ShannTurnbull/CurriculumVitae
SKYPE: shann.turnbull

Sustainable Money Working Group ( email )

Holyoake House
Hanover Street
Manchester, M60 0AS
United Kingdom

New Garden City Alliance ( email )

113 Guinness Court
Snowsfields
London, UK, hello@gardencities.org.uk SE1 3TA
United Kingdom
+44 207 378 1902 (Phone)

HOME PAGE: http://www.gardencities.org.uk

Register to save articles to
your library

Register

Paper statistics

Downloads
1,331
Abstract Views
7,914
rank
14,042
PlumX Metrics