Some obstacles to good corporate governance in Canada and how to overcome them (original) (raw)

Challenges to the Citadel: A Brief Overview of Recent Trends in Canadian Corporate Governance

1994

Politicians, bureaucrats, owners, managers and employees are becoming increasingly concerned with the capacity of Canadian corporations to survive and prosper in the twenty-first century. By and large, the attention focused on competitiveness has developed from the rapid international integration of goods, capital and service markets. This integration has resulted in the creation of a new borderless world, in which consumer preferences reign supreme and in which those corporations that fail to anticipate, shape and respond to these preferences with cost-and quality-competitive products face certain failure. Concern over the survival of national firms commands widespread societal attention because of the dependency of many core public policies on the economic surplus generated by robust private markets. Given the focus on globalization and competitiveness, it is not at all surprising that academics have expended considerable energy identifying and analyzing the determinants of national economic success in this new international order. Although the composition of the basket of favoured policies varies from scholar to scholar, most accord at least some importance to the quality of the system of corporate governance that obtains in a given country. Tracking the modern use of this term, most scholars look beyond the mere operation of a firm's formal governance apparatus (i. e., the board of directors) and consider how a wide range of market (e.g., capital, product, managerial and takeover markets), legal (e.g., derivative and personal suits) and political (e.g., shareholder voting) devices combine to discipline managerial behaviour. Disciplines Disciplines Law Comments Comments

The Governance of Canadian Traded Firms: An Analysis of the Ultimate Ownership Structure

SSRN Electronic Journal, 2003

We examine the ownership structure of 1121 Canadian listed firms. We analyze their direct and ultimate ownership and control, and other corporate features. We contrast our findings to those reported in recent research for East Asian and Western European firms. We find that ownership and control are relatively concentrated in Canada. The separation of control from ownership is pronounced in Canada. To shed more light on the "puzzling" Canadian corporate governance, we contrast the governance features of firms headquartered in Quebec (QUBFs) against those of firms in the rest of Canada (ROCFs). We find that QUBFs display more ownership and control concentration, more pronounced family and government control, and more pronounced use of pyramidal and multiple class shares than ROCFs. Yet, no distinguishable differences are reported with respect to the deviation between control and ownership.

A History of Canadian Corporate Law: A Divergent Path from the American Model?

The Research Handbook on the History of Corporate and Company Law (Edward Elgar), 2018

This chapter provides a brief history of Canada's corporate law. In part, it contemplates the judicial interpretations of the Canada Business Corporations Act (CBCA), and the controversies that arose from them. From this, it explains two claims that are often made about the CBCA. Some assert that it is more shareholder centric than the American models, while others assert the opposite: that it is more stakeholder centric. The chapter concludes that although both of these interpretations of the CBCA are reasonable from a gloss of the law, the reality of corporate governance in Canada is that managers, not shareholders nor stakeholders, have firm control over the corporation.

Corporate Governance in the Canadian Resource and Energy Sectors

Alberta Law Review, 2015

This article reports the results of a qualitative empirical study of the corporate governance practices of 23 resource and energy sector firms in Canada. The authors examine public disclosure and other documents filed by subject firms in each ofthe oil and energy, oil and gas trust, precious metal and forestry sectors and compare the firms' governance practices against ten indicia of effective governance advocated by regulators and stock exchanges. The working hypothesis ofthe article is that due to the global scope of the subject sectors, the sample firms may be better developed than, or have unique qualities compared to, firms in other sectors. The authors conclude that the sample firms perform reasonably well against the ten indicia. However there are significant sectoral differences.The authors note nearly all subjects have adopted codes of corporate conduct and an overall commitment to comply with new, more rigorous audit committee standards. Weaknesses include a lack of bo...

Corporate governance mechanisms, accounting results and stock valuation in Canada

International Journal of Managerial Finance, 2012

ABSTRACT Purpose – The purpose of this paper is to investigate the relationship between corporate governance practices or mechanisms and firm value, as measured by accounting and market data. Design/methodology/approach – Partial least square analyses were performed on a sample of 355 observations from 199 Canadian listed companies. The greater variability allowed under the Canadian principles-based institutional setting than under the rules-based USA SOX environment is well-suited for these tests. Findings – Results suggest that some governance practices, namely the percentage of independent directors on the board, the use of stock options and the frequency of board meetings are significantly and negatively related to the firm's net book value or income. However, most individual governance practices appear to have no significant impact on the firms’ market value. Research limitations/implications – The potential interrelationships between corporate governance practices and contextual variables are not specifically taken into account, except for the firms’ industrial sector. It is also possible that certain governance mechanisms jointly impact firm value. Practical implications – This study does not support the current emphasis by regulators on governance practices which mainly concern the monitoring function of the board as opposed to its strategic one. Originality/value – The paper uses Canada as a laboratory where companies are “invited” rather than “required” to follow corporate governance best practices. This greater corporate discretion in the choice of governance practices provides the variability necessary to test the effect of governance on firm value. Furthermore, in the interest of triangulation, a model seldom seen in the governance literature is used to examine the impact of governance mechanisms on firm value and performance, as measured by accounting and market data.

Shareholder Democracy in Canada

2010

The federal government stands poised to exercise its constitutional right to regulate financial markets, an area traditionally left to competing provincial securities commissions. The current state of securities regulation renders impotent US-style takeover defences, such as poison pills and staggered boards, but allows voting caps and pyramiding in their stead. Various federal securities regulation models are weighted in light of the current state of their needed complementary institutions. One option, for which Canada is relatively well prepared, is the British model of activist independent institutional investors and mandatory takeover bids.

Corporate governance and performance: a study of Canadian companies - 2009

Following the episodes of WorldCom, Enron , Pmmalat, Lehman Brothers , Nortel (in Canada), corporate governance and its impact on shareholder value has been brought in into the forefront of the debate. Studies on the relationship between corporate governance and the performance of firms to date suggest a positive association between corporate governance and various measures of performance of companies .. Unlike the widely dispersed ownership in countries like United States and United Kingdom, the ownership of companies in Canada is concentrated a controlling shareholder (usually a wealthy family) owns majority of the equity and ownership of firms. In Canada studies on the relationship between corporate governance and various performance indicators of firms are mixed. The present study examines the relationship between corporate governance and firm performance in Canada using financial performance data of 152 firms in 2009 and corporate governance ranking of those firms. The empirical results based on regression (ordinary least squares) showed that an overall corporate governance variable has a positive impact on firm's performance in Canada. These results are invariant to the choice of firm performance indicators like Return on Asset (ROA) and Return on Equity (ROE). These results are broadly in conformity with earlier studies (although there were mixed results in earlier empirical investigation). These results are also interesting given the fact that Canadian ownership structure is more concentrated. Most of the Canadian companies are listed also in US markets and that provides impetus for corporate governance practices to be implemented in Canada as well. Given these facts, the empirical results are not surprising. Apart from IV these facts, these results are based on data set of 152 Canadian companies for 2009 only; there is need for more empirical verification and calibration. But that is beyond the scope of the present study due to constraint of resources and time.