Building Trust in Corporations

Presented to 6th International Conference on Corporate Governance and Board Leadership Paper, Henley Management College, UK, 6-8 October 2003

13 Pages Posted: 6 Oct 2003

See all articles by Shann Turnbull

Shann Turnbull

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

Date Written: August 8, 2003

Abstract

The paper identifies three necessary conditions for investors and other stakeholders to trust companies and how such conditions might be met. First, directors require systemic processes for obtaining information independently of management on the strengths, weaknesses, opportunities and threats in both management and the business. Second, directors require sufficient security of tenure to provide them with the will to act. Third, directors require the capability to act alone, if required, to protect the interests of the company as a whole. The paper outlines how these conditions could be met with corporate constitutions that create a division of power among shareholders with corporate officers being elected in different ways. In addition, shareholders would constitutionally provide employees, customers and suppliers, including the host community, voice to advise directors and themselves on the performance of management and the business independently of management and provide a systemic process for detecting when trust in management might be misplaced.

Note: Paper presented at the 6th International Conference on Corporate Governance and Board Leadership, Henley, October 7, 2003

Keywords: Conflicts, Cumulative voting, Directors, Governance, Multiple boards, Power, Shareholders, Stakeholders, Trust

JEL Classification: D72, D74, G34, G38, K22

Suggested Citation

Turnbull, Shann, Building Trust in Corporations (August 8, 2003). Presented to 6th International Conference on Corporate Governance and Board Leadership Paper, Henley Management College, UK, 6-8 October 2003, Available at SSRN: https://ssrn.com/abstract=436401 or http://dx.doi.org/10.2139/ssrn.436401

Shann Turnbull (Contact Author)

International Institute for Self-Governance ( email )

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