Cass and corporate governance

In the last ten years since the corporate scandals at Enron and WorldCom, corporate governance has developed from an issue that was mainly (if not entirely) of interest only to compliance and audit professionals into a topic that has almost daily media coverage. Since the beginning of the financial crisis in 2008 public awareness has grown even more, and issues such as board behaviour and ethics are now regular discussion points in financial and popular media. Fortunately not all the current issues in corporate governance are defensive and negative: alongside the outrage and reaction to unethical and self-centred management practices are very positive and constructive initiatives to innovate and renew management principles and practices across the world.

Cass has long been a strong advocate of corporate governance, and it has been a central part of our MBA programme for many years. During this time both academics and students have carried out ground breaking research into the key issues that managers in all types of enterprise need to address. Two major themes that have emerged recently; are how businesses should react to the financial crisis and be better prepared for the future, and the development of the body of knowledge of governance and Islamic finance.

It is clear in hindsight that while there was no single cause for the financial crisis; it follows that there will also not be a single solution. But some clear issues can be identified as helping to create the conditions that were necessary for systems to break down as catastrophically as they did. These issues can be placed in both organisational and personal contexts: poor or ignored corporate governance principles, and a low appreciation and acceptance of ethical principles. This is not to say that enterprises deliberately set out to act unethically or illegally, rather that core principles of trust and respect for stakeholders were placed behind personal gain. A very positive investigation into how the problem of trust among businesses was initiated by the Lord Mayor of London last year, and several Cass academics were actively involved in a major survey of city institutions and individuals from some of London’s best known companies. Our findings will contribute to how individuals and companies can raise the profile of ethical standards and the recognition that actions do not take place in a moral vacuum.

Our research into Islamic financial systems, and in particular the related corporate governance issues has grown massively since we established our MBA programme in Dubai. For several years now collaboration between students, local and regional businesses and Cass academics has been examining the infrastructure and implementation issues of Islamic finance. This research has led to contributions to the knowledge and guidance that professionals from all over the world need to understand in order to understand this important area. Recent activities include practical guidance to support Sharia compliant financial practice, development of corporate governance codes for Islamic financial services, Corporate Social Responsibility (CSR) initiatives in the Middle East and the governance of sovereign wealth funds in the Gulf. There has never been a more important, nor as interesting a time to be involved in corporate governance research.

Professor Rob Melville