Corporate Decision-Making in Canada

Duncan McDowall is a professor of history at Carleton University, and
the author of Quick to the Frontier: Canada’s Royal Bank.

This compendium of 18 research studies commissioned by the federal
Department of Industry focuses on the current state of what is called
“corporate governance.” Corporate governance pertains to the
processes by which corporations make decisions and to how they are
motivated and constrained in making these decisions. In introducing
these studies, Industry Minister John Manley suggests that to date,
public-policy debate over corporate governance in Canada “has been too
narrowly conceived” and that in an age of globalization, a broader
perspective is necessary. What follows are studies generated by
professors of economics, business administration, and finance, along
with the occasional lawyer and investment manager, on corporate
ownership and concentration, the board, director liability,
institutional liability, institutional investors, executive
compensation, minority-shareholder protection, and long-term investment
decisions. Pages of models, regression equations, case studies, and
international comparisons follow. The editors conclude the book with a
set of “policy options” for corporate governance, all intended to
boost investor confidence in our business leaders. These touch on issues
familiar to daily readers of the “Report on Business”: outside
directors, insider trading, minority-shareholders’ rights, and the
treatment of whistleblowers—all of which should be dedicated to being
“visible.” In general, the tenor of this review is neoconservative,
mindful that if the rules governing corporate governance are made “too
onerous” they will hamper Canada’s international competitiveness. If
they are “too lax,” investors will feel insecure and move their
money elsewhere.

The studies’ authors leave Manley with the challenge of finding a
“balance.” Who else will wade through these 700 pages? Probably not
corporate leaders or senior bureaucrats; neither has the time. Business
students might profitably read individual chapters, but the book is too
thick and too esoteric to interest many others.