Let’s start by looking at the Take My Corporate Governance website. Its mission is to “exert influence and create change.” In other words it tries to give professors and other university administrators a hand by creating a platform through which they can promote their corporate governance agenda. As if we haven’t noticed, that agenda includes eliminating tenure, firing academic freedom and making students work their way into corporate governance thanks to taxpayer-funded research grants. Recently, at a dinner hosted by UT Austin Center for Law and Business, Dr. George Brown was asked by a questioner if he thought corporate governance was a corrupting force. His answer, interesting and should be required reading, were “yes.”
Is our nation’s leadership model ready for the Take My Corporate Governance movement? Is our higher education system prepared for such a radical change? Will faculty fight back and insist on their right to provide informed decisions about their school? I’ve been writing about higher education for over a decade and have no answer to those questions other than this; We’ll soon see if we have already lost our way. I fear we have already lost our way on everything related to higher education.
There are people on all sides of the corporate governance argument, including UT administrators and corporate governance supporters. Some are good, some are not so good. No matter how you slice it, corporate governance has become a cause cussling or even trading ground with religious fundamentalism. It is certain to become the new symbol of culture wars.
The argument for corporate governance is compelling. Simply put, if investors, customers and employees do not have a clear idea of where their money is going, then they will lose confidence in the corporate governance system, and that can not be good. In a truly transparent and democratic system, corporate accountability should be everyone’s first concern. How much of our tax dollar is going to companies that do not make good decisions in the public’s interest? And how much of our money is going to public institutions of higher learning that are too busy providing a comfortable bubblegum experience for the wealthy to give much thought to the real world, which is why there are so many PhDs in the economic sciences these days?
But, one could argue that a future without corporate governance will only render our system of governance dysfunctional, and that without such organizations in our lives, chaos will reign. And there is some truth to that, I agree. However, I also believe that corporate governance can be beneficial to an organization in ways it is currently set up. Perhaps one of the most beneficial aspects of corporate governance is that it prevents organizations from making bad decisions that will hurt their value and/or their revenue stream. For instance, a business could go through the motions of creating a corporation that will be quite successful, and then start to tax its investors in order to provide short-term loans that will, if nothing else, allow the company to get back on its feet.
However, such a business would likely find itself on the brink of bankruptcy, and without the backup of corporate governance, it would fail even more miserably in the future. Thus, in that sense, it is not entirely harmful to introduce corporate governance into the mix. Another possible benefit is that a corporation can use corporate governance to protect itself against corrupt business practices, such as kickbacks and other types of corporate corruption. For instance, if a business partner provides false information to the board about what a company is doing or goes against the wishes of the shareholders when making business decisions, then such a business partner might be considered a corrupt person. However, if the corporation has a corporate governance policy that prevents such conduct, then it can be seen as having a shield against such things.
All in all, it is clear that corporate governance is important for any company that wishes to survive long term in the marketplace. A company cannot do business without a solid system in place that can protect it from external threats and help it to make good decisions that will be beneficial to its future and its stock price. Furthermore, such a company cannot operate effectively unless it has a well defined set of rules and procedures that ensure that it meets all of its obligations in a timely fashion. Indeed, if such a system existed, then surely someone or something would have told us about it by now, wouldn’t you agree? So, as you can see, corporate governance is important and well needed, especially for a company that wants to continue operating in the current climate.