Corporate Governance: Principles, Policies and Practices

Bob Tricker helped introduce many of us to corporate governance as a field. His 1984 long out of print, Corporate Governance: Practices, Procedures and Powers in British Companies and their Boards of Directors was first to include the phrase "corporate governance" in the title. His definition of the term, even then, was spot-on: "The governance role is not concerned with the running of the company, per se, but with giving overall direction to the enterprise, with overseeing and controlling the executive actions of management and with satisfying legitimate expectations of accountability and regulation by interests beyond the corporate boundaries." Twenty-five years later, Tricker updates his opus.

Tricker notes in his introduction that, "Some teachers, particularly those working with students without a lot of business experience, might prefer to build their courses from theory to practice. This is quite feasible, not least since to date the theories of corporate governance, other than a broad concept of agency, have not contributed significantly to its development. The underlying paradigms have been derived from company law and the codes of good practice have emerged as responses to corporate catastrophe and collapse." Thus, readers can see at the outset, Tricker is a realist.

Anyone familiar with his work knows he has certainly tried to build the discipline. Corporate Governance: An International Review was his effort to publish cutting-edge research in comparative corporate governance in hopes of building theory and practice on rigorous science. Tricker has often proclaimed the 19th century the entrepreneur’s, 20th century management’s, and 21st that of governance. We certainly see focus swinging to questions of legitimacy and effectiveness in wielding power worldwide. By the time the 22nd century dawns, corporate power may actually be exercised "in a way that ensures both the effective performance and appropriate social accountability and responsibility… rooted in rigorous and replicable research," as Tricker envisions. If it happens, it will be in no small part due to Tricker’s contribution. I was delighted to see my website,, listed as the first of many useful websites at the end of each chapter.

Tricker quickly outlines the history and issues of corporate governance. He covers all the usual topics in corporate governance but does so from a multitude of perspectives, as perhaps only he can. Included are a large number of graphics and case studies that simplify understanding of complex relationships and concepts. I even like the typesetting. If you want to know not only about corporate governance in the United States, but also internationally, especially current and former Commonwealth countries as well as China, Japan, Russia, etc., you will find the book an unequaled guide.

Tricker generally takes a very measured approach to his subject, providing the latest advice on principles, policies and practices, balancing all perspectives worth attention. However, when it comes to grounding praxis in the results of research, he is passionate. For example, in discussing the future of corporate governance reporting, he predicts, "The current box ticking approach to simple structural questions will be replaced by performance measures against corporate governance criteria. The reports will also provide independent and objective opinions on the caliber of directors and boards, and on the quality of corporate governance, in the same way that auditors now report on corporate finances." I hope he is right and I hope they are not as "independent and objective" as some recent reports on corporate finances but as good as they could be without current conflicts of interest.

Tricker calls for a "new paradigm," that reflects the interests of all principal stakeholders. "Instead of legal entities, corporate bodies could be seen as self-governance social institutions… defined by the ability of external parties to exercise power over the entity… governance arrangements may also have to be more participative, less secretive, and fare more transparent."

While Tricker sees globalization driving integration, a counter movement of nationalism and economic patriotism is also on the rise, especially with the latest economic crisis. "Ultimately, a class of directors of global companies may emerge who transcend national boundaries, economic interests, and political barriers."

He cautions that "greed seems to have replaced trust as capitalism’s driving force. Indeed, the dominant paradigm of corporate governance, agency theory, is rooted in the belief that people are utility maximizers who need to be controlled because they cannot be trusted." "Above all, governing bodies need people who can be trusted, people who understand their fiduciary responsibilities, people who put the rights and needs of others ahead of their own." He then reminds us, "the best interests of people need not be solely power, personal aggrandizement, or greed." Integrity, treating employees and other stakeholder fairly and being reliable stewards for the others’ interests must be elevated in importance.

Be sure to check out the blog Tricker writes with Chris Mallin, Founder and Director of the Centre for Corporate Governance Research, at the University of Birmingham, UK. Read more about both. As I write my review, Tricker is back in Hong Kong. He notes, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), the largest investment fund in the world, ensures that the State’s interests are represented in the activities of China’s listed companies, including removal of directors and top executives. Obama recently removed the head of General Motors and the British Government is currently involved in the appointment of directors to various British banks they have nationalized.

"Maybe convergence is a two-way street," he concludes. Undoubtedly. Although primarily aimed at graduate students, complete with projects, exercises and self-test questions, practitioners will also benefit. Corporate Governance: Principles, Policies and Practices reflects the author’s worldwide experience and multi-faceted perspective on the critical subject he has been instrumental in naming and advancing.


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