EIASM'16: Day one summary

The 13th edition of the Corporate Governance Workshop convened by the European Institute of Advanced Studies in Management (EIASM) was hosted by SDA Bocconi in Milano, Italy. Approximately 50 leading thinkers and researchers from over 20 countries gathered to explore emerging trends in the fields of board practice and corporate governance. Nearly 50 presentations were accepted onto the two-day programme. Highlights from three of the papers presented on the first day are summarised here (highlights from the second day are posted in a separate summary):

• Alessandro Merendino (Coventry University) opened the conference with a very interesting presentation on the subject of the governance of mega-events. His case (the 2016 Rio Olympics) provided some very interesting insights about how mega-events are governed. The analysis of 43 in-depth interviews (with very senior managers and board members) revealed considerable structural complexity, partially dictated by political drivers at both the country and the Olympic Games organisation levels. Surprisingly (given a clear purpose was established—to deliver the Games), the primary focus of the system of corporate governance lay firmly on the monitoring end of the conformance–performance. However, when other factors including that the roles of president of Rio16 and the chairman of the board were held by the same person, and the other board directors were appointed by the chairman are factored in, the strong compliance focus is perhaps less surprising. The preservation of personal reputation appears to have been a far more significant moderator of the behaviour and decision-making than the successful delivery of the Games. Given these insights, it is little wonder why the pre-Olympic planning often runs late, and the Games invariably end up costing far more than originally anticipated (leaving the host city with a long-term debt burden). Consequently, those considering 
• Jari Melgin (Finland) delivered a powerful paper that revealed some great insights about decision rights and where power actually lies (in the boardroom or the executive suite?). Thresholds of decision rights determine the boundaries of power between board and management. If decision thresholds are too lax for example, boards may not properly represent shareholder interests. Similarly, if decision thresholds are too tight or too extensive, then powers transform boards into management teams. He summarised the results of an extensive research project. A core funding was that the  power to make decisions (of various types but especially strategic decisions) has 'formal' (stated decision rules: what is supposed to happen) and 'real' (what actually happens) characteristics. Decision control can be stratified into hard law, soft law (codes, etc), articles (company specific rules) and board rules layers. Melgin concluded that 'board rules' are especially significant because they provide guidance to the board in the case that a decision fits within the boundaries of hard and soft law and articles but the basis and delegation (for the decision) is still not clear.  
• Joanna Pousset (Barcelona) presented an interesting talk on conflict amongst corporate elites (i.e., between directors and the chief executive). Using the largest construction company in Europe (VINCI), Pousset described a series of conflicts that have entered the public domain, in an attempt to understand the intrinsic motivations of boards and executives during times of conflict. Pousset conducted an extensive analysis of media reports to build a picture of each conflict (there were several). She concluded that CEO duality (whether the CEO and chairman roles were held separately or by the same person) was a material factor. This finding was in stark contrast with a large body of research that shows that CEO duality is not a reliable indicator of board or board performance, at any level. That the analysis had arrived at this point was worrisome. Why the chairman or CEO was not approached for their perspective, even to support or refute the analysis, beggared belief.

In sum, the day revealed a mix of interesting insights and concerns. In particular, one long-held concern (that many researchers continue to conduct research based on the analysis of publicly-available quantitative data) was upheld. Why researchers continue to investigate boards and corporate governance from a distance (outside the boardroom) is a mystery to me. If we are to truly understand what boards do, how decisions are made and influence is exerted by boards from and beyond the boardroom, then researchers need to adopt the recommendations of others: that direct observations are crucial to the gaining of reliable insights.