Corporate Governance

The Role of Stock Exchanges in Corporate Governance (Introduction)

By J. Robert Brown

In the corporate governance area, there are few issues quite as important as the role of stock exchanges in the governance process.  Stock exchanges can play a substantial or limited role in the process.  In the United States, they are major players, requiring boards with a majority of independent directors and various committees, likewise staffed with independent directors.  In that sense, the NYSE and Nasdaq have a substantial regulatory role.  On the other hand, they are "for-profit" entities with a duty to profit maximize, something that could arguably conflict with these goals. 

Yet the for-profit status is not unusual but has become the norm in the OECD.  Thus, other exchanges and countries are confronting this evolution.  The OECD recently published a study, The Role of Stock Exchanges in Corporate Governance, that examined the impact of the demutualisation stock exchanges and the impact on their role in the governance process.  We will take a few posts to look at some of the analsyis and contrast these varying roles. 

Full post as published by The Race to the Bottom on September 14, 2009 (boomark / email).