Are Companies Capable of Being Governed? Key Lessons Learned from the Banking Crisis
Posted on: 22 January 2013
McCann FitzGerald Chair of Corporate Law, Blanaid Clarke, holds Inaugural Trinity Lecture – entitled “Corporate Governance: An Oxymoron?”
Professor Blanaid Clarke, the new McCann FitzGerald Chair of Corporate Law at Trinity College Dublin, recently held her inaugural lecture which addressed the implications of corporate governance failings in the run-up to the financial crisis for the regulation of companies outside the banking sector.
The lecture focused on a number of key lessons to be learned from the Banking Crisis for companies outside the banking sector:
1. Directors need to challenge. Reports into the Crisis across the world suggest that the principal deficiencies in bank boards related more to patterns of behaviour than to organisation.
2. The composition of the Board is crucial and all directors must bring “an independent judgement to bear” in matters before the board. Diversity is important to counteract “group-think” and independence needs to be balanced with expertise.
3. Rules on pay structure and disclosure of key information (including risk management processes) need to be re-examined.
4. The behaviour of shareholders in the run up to the Crisis raises questions in general about the effectiveness of existing corporate governance rules based on the presumption of effective control by shareholders of listed companies.
5. In examining the Crisis, the emphasis needs to be placed on ideas and not people
6. Interdisciplinary research is enormously beneficial in attempting to understand the errors of judgement which led to the economic crisis.
Professor Clarke, who has an internationally recognised track record in the field of corporate law, will lead the development of this field in Trinity’s Law School and at a national level make a significant contribution to research and policy making. The Law School, known internationally for the depth and diversity of its scholarship, aims to become a global centre of excellence in corporate law and this appointment will now enable it to offer, among other things, teaching in corporate accountability and regulation, an area of considerable significance in the current environment.
Pictured on the occasion of Professor Blanaid Clarke’s inaugural lecture as the new McCann FitzGerald Chair of Corporate Law at TCD are Professor James Wickham, Dean of Arts, Humanities and Social Sciences, Professor Hilary Biehler, Head of the Law School, TCD, Professor Blanaid Clarke and McCann FitzGerald Chairman, John Cronin.
Concluding her lecture Professor Clarke said: “Challenges remain for corporate governance outside the banking sector. We still need to refine the appropriate governance framework and an examination of past errors can help us with this. However, creating a regulatory environment where companies do not fail is not possible and the attempt to adopt an overly precautionary approach could prove costly and potentially paralysing.”
She added: “The value of a good system of governance and what makes the words “corporate” and “governance” compatible is in developing a framework which makes it harder for bad behaviour to occur and systems which makes it easier and quicker to identify and treat problems as they arise. An appropriate system of accountability is also required.”
Professor Hilary Biehler, head of the Law School, Trinity College Dublin said: “Trinity College Dublin is delighted that Professor Clarke has been appointed to this role. She has an excellent reputation for her research and scholarship in the field of corporate law. Professor Clarke’s inaugural lecture was both engaging and thought provoking and she will play a highly significant role in driving and enhancing the existing work being undertaken in the Law School in this area.”
McCann FitzGerald Chairman, John Cronin said: “We are very pleased to see Professor Clarke take up her new position and that her inaugural lecture tackled such an important and relevant topic. Proper consideration of the implications of failures in corporate governance is something which is very timely and we look forward to the contribution which Professor Clarke will be able to make in this area in her new role.”
About Professor Blanaid Clarke: Prior to her appointment in Trinity College, Blanaid Clarke (BCL, MBS Banking & Finance, BL, Ph.D.) was an associate professor of corporate law in UCD and one of the founding members of the Centre for Corporate Governance at UCD. She was a member of the European Commission’s Reflection Group on the Future of EU Company Law and is a member of the European Model Company Act Group and the University of Oslo’s Sustainable Companies project. Blanaid is one of the editors of Legal Studies and is on the editorial boards of the Journal of Business Law and Palmer’s Company Law. She works with the Irish Takeover Panel and is a member of the European Securities and Markets Authority Takeover Bids Network. In October 2010, she was appointed to the Irish Central Bank Commission. Her research interests include corporate governance, securities law, takeover law and financial regulation.
McCann FitzGerald Chair of Corporate Law The McCann FitzGerald Chair of Corporate Law at Trinity College Dublin was established to enable The Law School, known internationally for the depth and diversity of its scholarship, to become a global centre of excellence in corporate law. The appointment of a Chair of Corporate Law now enables the School to offer, among other things, teaching in corporate accountability and regulation, an area of considerable significance in the current environment.
The School of Law – Trinity: The School of Law in Trinity College Dublin, established in 1740, is Ireland’s oldest and most internationally renowned law school. Graduates and former members of staff include The Hon. Ms Chief Justice Susan Denham, Chief Justice of Ireland and former Presidents of Ireland, Mary Robinson and Mary McAleese.
About McCann FitzGerald:
With approximately 450 people, including over 270 lawyers and professional staff, McCann FitzGerald is one of Ireland’s premier law firms. It is consistently recognised as being the market leader in many practice areas and offers a full range of services to corporate, financial, service and industrial companies. McCann FitzGerald’s clients include international organisations, major domestic concerns and emerging Irish companies. It also works with many clients in the state and semi-state sectors.