Alexandra Zeitz (Global Economic Governance Programme, University of Oxford)
The corporation, as an institution, is in crisis. So argued Colin Mayer, Peter Moores Professor of Management and the Saïd Business School, in his October 20 presentation at the PEFM seminar.
Mayer attributed the crisis of the corporation to its governance structure. He argued against the prevailing view that the greatest concern with respect to corporate governance is the ‘agency problem,’ i.e. the fact that shareholders exercise insufficient control over corporations.
Instead, argued Mayer, the problem of the corporation lies precisely in the fact that short-term shareholders are able to hijack the corporation, distracting from the commitments the corporation might have to other stakeholders, including consumers and employees. Shareholders might even reward the corporation for infractions where these seem to provide short-term benefits that outweigh reputational costs or fines; Mayer cited the case of Barclay's share price increasing by 60% during the six months after the LIBOR scandal broke.