Corporate Governance; a synthesis of theory, research and practice
by H. Kent Baker and Ronald Anderson, Editors

ISBN: 978-0-470-49913-9, Publisher: John Wily & Sons
Reviewed by: Julie Garland McLellan*

There is a growing trend towards multi-authored books. Every month there seem to be more and more of these proliferating on bookstore shelves. Readers could be forgiven for believing that the trend is powered by the inability of the individual authors to write more than one brief chapter without overextending their expertise. This book is what multi-authorship promises but rarely delivers; wide ranging expertise and multiple perspectives that enlighten rather than confuse.

Each chapter is of a quality that could stand alone as a learned scholarly paper. Each gives a different perspective and insight on corporate governance. The whole is a beautifully curated collection that adds value to scholarly investigation, practical application and leisurely conjecture. It will be a thought provoking read for academics (who will welcome its well referenced source citations as well as its clear addition of new perspective to the study of governance), consultants (who will find in its pages ideas for new services and lines of enquiry to build their practices for years to come) and practicing directors (who will find it a valuable stimulant of thought on how better to govern).

If read in the 'traditional book' version rather than the kindle version it will also be enjoyed as a cerebral alternative to dumbbells! This is a big book, nearly 700 densely typed pages and hefty enough to turn a handbag into a lethal weapon.

The editors have done a masterful job of creating a structure and flow for the disparate topics so that the book evolves in a purposeful manner if read (as I read it) from start to finish. There is some repetition of concepts but from a sufficiently diverse set of perspectives to make this tolerable if not actually enjoyable.

The book starts with a comprehensive overview of the evolution of governance theory and it societal linkages. Whilst there are some statements in this section that may raise a few hackles among the readers (such as the suggestion that it is unclear whether directors serve the owners of their corporations or society; get that one wrong in practice and it is a fairly quick route to jail - Robin Hood was not a proponent of good corporate governance however popular he may have been with society at large) it is generally a useful background for practicing company directors. Knowing the forces that shape the current regulatory frameworks enable directors to better balance their responses to them.

Alex Todd, in an excellent chapter on Corporate Governance Best Practices, comments of the diverging schools of thought behind principles-based and prescriptive practice legislative frameworks and on the need to tailor governance to the lifecycle stage of the enterprise. Whilst this will assist directors in organisations with rapidly evolving businesses, it could usefully have been extended to consider the aims of the enterprise and whether governance should be fundamentally different in commercial, not-for-profit, or government sector businesses. The tendency of bureaucrats to 'back end' regulation into principles-based regimes should also not be underestimated; it can have a large impact on the freedom which boards have to determine a governance framework that really fits their organisation's needs.

The application of Elliot Jaques' theories of requisite organisation to governance is a major value add and could, had space and editing allowed, have been extended. The need to remove governance from the realm of low level compliance bound staff and place it, where it belongs, with staff capable of operating at the conceptual and creative levels where long term sustainability is becoming especially urgent for many organisations, particularly in highly regulated sectors of the economy.

Shann Turnbull, provocative and precocious as ever, has co-contributed an excellent chapter entitled 'What is Wrong with Corporate Governance?' The question is well answered. This chapter defines good governance as 'the ability of corporations to efficaciously achieve their purpose while minimising the involvement of the law or regulators in protecting and furthering the interests of corporate stakeholders and society in general'. It is an excellent definition with immediate practical application.

Some of the ideas in this chapter are currently untried but, like the idea of a 'shareholder senate' where auditors may be selected and overseen by a committee on a 'vote per investor' basis rather than the current 'vote per share' basis, would provide a very different balance of power. Concepts such as network governance do require the reader to suspend his or her personal belief that the current order of things is the natural (and hence inevitable) order of things; this is great practice for making quantum leaps in corporate strategy or dealing with disruptive change.

Daniel Ferreira's chapter on board diversity has a robust selection of quotable statistics and some very interesting (if still inexplicable) linkages between the presence of women on boards and a number of corporate outcomes or traits. Whilst remaining safely Delphic on the issues of quotas, causality and societal conditioning Ferreira is a welcome addition to the field of study.

The thirteen chapters on external governance are an enlightening compilation of perspectives on the effects of shareholder activism (or just active shareholders), banking, financial and societal stakeholders, proxy issues, takeover activity and regulation. Too many books investigate only the corporation specific influences without looking at the societal determinants of corporate behaviour. This book appears to strike a better and more well founded balance by considering external influences in a structured way.

This book is by no means a 'how to' manual for directors, for shareholders, or for regulators but whilst not setting out prescriptive steps, it does illuminate some advanced thinking. It is a valuable addition to any governance library.

A review would be incomplete without mention that this book is part of the Kolb Series. It is a testament to the value of the book that I immediately purchased another from the same series (on Enterprise Risk Management) and will probably read a few more of the governance related titles in the fullness of time.

Summing up - this is a great book but will require adequate thinking time for the concepts to become truly useful. Read, remember and reflect on the content; it will improve your governance!

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* Julie Garland McLellan is a professional non-executive director, board and governance consultant and mentor. She is the author of "Presenting to Boards", "Dilemmas, Dilemmas: practical case studies for company directors'", "The Director's Dilemma", "All Above Board: Great Governance for the Government Sector" and numerous articles on corporate strategy and governance.

Julie Garland McLellan to judge 2011 Global eBook Awards