Brookings: Experts - Stephen M. Davis

Countering Corruption: 2012 Conference Report from the World Forum on Governance

Stephen M. Davis, Thomas E. Mann and Norman J. Ornstein — Mon, 04 Mar 2013 00:00:00 -0500

EXECUTIVE SUMMARY

Reformers, businesspeople, investors and citizens alike are grappling with a common issue around the world: Good governance. How can each nation secure government that is honest and not corrupt, that serves the public interest and not special interests, and that aims to deliver practical solutions to today’s most pressing problems? How can corporations and institutional investors achieve good governance of their own, that protects and promotes long term value while complying with legal norms, ethical standards and customer expectations? What is the relationship between good corporate and democratic governance? Indeed, is either possible without the other?

In December 2012, Brookings convened the second World Forum on Governance, which has unique capacity to join thought leaders from the public and private sectors together. The objective was to identify means to leverage the collective power of capital, media, public policy and social organization behind the movement against global corruption.

Conference participants included a rich mix of leaders, experts and grassroots innovators from Latin America, Africa, the Middle East, Europe, North America, the corporate and investment worlds, traditional and new media and faith-based organizations. Delegates revisited the Ten Principles outlined in the Prague Declaration, which was formulated during the 2011 World Forum on Governance, reviewed reports on initiatives raised at the 2011 meeting, and discussed next steps to address governance and integrity.

Most importantly, breakout sessions trained attention on four policy action areas critical to the fight against corruption:

Crafting effective law, regulation and enforcement within and across borders;
Strengthening the business and investment case for managing corruption risk;
Linking a wider group of civil society organizations, including faith groups, behind the push for integrity in the public and private sectors; and
Enhancing the capacity of traditional and social media to serve as watchdogs against corruption.

One plenary session concentrated debate on the experience of financial institutions; a second addressed how the strengths and weaknesses of democracy affect corruption. By the end of the 2012 WFG, conference organizers gained enough feedback and useful ideas from the participants to decide upon an agenda of next steps. These policy action ideas are clustered around five themes. Organizers can steer follow-up on each to specific conference participants or relevant organizations; other actions can be taken forward by the Brookings Institution.

Establishing a framework for an investor road show, to bring the voice of capital directly to political leaders on the business value of fighting corruption.
Encouraging greater collaboration among policymakers around the world to incubate legislative and policy action to improve anti-corruption efforts.
Increasing the capacity for the media to report on and be educated about corruption and increasing accountability for media companies themselves.
Engaging with the faith community to identify a role for this critical voice in the fight against corruption.
Raising the profile of firms considered leaders in the field for business integrity, transparency, and corporate governance.

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Authors

Stephen M. Davis
Thomas E. Mann
Norman J. Ornstein

Mobilizing Ownership: An Agenda for Corporate Renewal

Stephen M. Davis — Fri, 01 Jun 2012 00:00:00 -0400

Editor's Note: This report was released in conjunction with an event at Brookings on The Modern Shareholder: How a Short-Term Focus is Harming U.S. Corporations.

With Barack Obama trying to paint Mitt Romney as the embodiment of ruthless capitalism, and Romney countering that the president suppresses free enterprise, Corporate America is center stage as never before in a modern US election campaign. Stephen Davis argues that in the haze of the presidential campaign season, both candidates may be missing promising policy ideas to stimulate growth and responsibility.

For as much effort as policymakers have spent modernizing corporate structures, they have devoted comparatively little attention to the institutional investors they count on to oversee the market, Davis writes. This paper explores a policy agenda that mirrors corporate governance reforms, designed to strengthen the capacity of institutional investors to act as long term owners.

Davis offers a formula for prudent stewardship in the broader capital market and “reforms that put the interests of citizen-investors first hold out the prospect of making better citizens of corporations.” Below are highlights:

Corporations should issue a disclosure statement which provides transparency of things like government arrangements and offers appropriate feedback channels.
Reforms to fiduciary duties in the capital markets by, for example, rediscovering the duty of impartiality or applying fiduciary duty to intermediaries.
Establishing public policy steps to US regulations of investment, which serve both corporations and savers. Davis writes that one important question has to be answered by policy experts first: “Who should mind the industry? Oversight of long-term savings has become a regulatory orphan.”

The benefits to correcting to the world of institutional investment are numerous, Davis writes, and carry the potential of giving corporate boardrooms both capital and a license to innovate, embrace appropriate risk, and address extra-financial drivers of value creation over the long term.

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Mobilizing Ownership: An Agenda for Corporate Renewal

Authors

Stephen M. Davis

Prague Declaration on Governance and Anti-Corruption

Thomas E. Mann, Stephen M. Davis, Nell Minow and Norm Ornstein — Wed, 21 Mar 2012 13:55:00 -0400

Participants in the first World Forum on Governance, representing governments, business, investors, media and non-governmental advocacy groups from around the world, convened in Prague in November 2011 to analyze the link between governance and corruption and to find practical solutions that can begin improving the situation. The Forum was unique in bringing together representatives of both the public and private governance communities to discuss the problem of corruption in both its broad and narrow senses.

As a result of these discussions, co-directors of the forum Tom Mann, Governance Studies senior fellow, and Norm Ornstein, resident scholar with the American Enterprise Institute, along with Stephen Davis, nonresident senior fellow at the Brookings Institution and executive director, Millstein Center for Corporate Governance and Performance at the Yale School of Management, and Nell Minow, member of the board at GovernanceMetrics International, who served on the Forum’s planning committee, developed an integrated analytic framework, known as the Prague Declaration on Governance and Anti-Corruption, to reinvigorate trust in democracy and good governance that is both effective and honest.

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Authors

Thomas E. Mann
Stephen M. Davis
Nell Minow
Norm Ornstein

Image Source: Uyen Le