History of ECGI
History of ECGI
ECGI was established in 2002 but its origins began in 1995. This summary is intended to outline the development path of the organisation as it evolved from the European Corporate Governance Network (ECGN).
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Since its inception, the European Corporate Governance Institute has been an organisation that functions squarely on the goodwill, enthusiasm and strong collaboration of its members. The path to 2017 is replete with visionary scholars and practitioners, each contributing to the building blocks that have shaped and maintained the ECGI for the past fifteen years.
The seeds were sown in 1995, when the European Corporate Governance Network (ECGN) was established around a comparative multi-country project that was to study the ownership and control of listed companies in Europe.
By 1997, the newly established Corporate Governance Committee of the European Association of Securities Dealers (EASD), a non-profit association with the purpose of “creating favourable conditions for an efficient and competitive pan-European equity market, in the first place for growth companies” had become convinced that good corporate governance is fundamental to the success of any organisation. Its board established a sub-committee on corporate governance, the first task of which was to develop a pan-European corporate governance code that could be adopted by companies from any jurisdiction. Marco Becht was brought in as rapporteur and scientific adviser.
The Code put forward recommendations on auditors and the board, in particular advocating the appointment of non-executive independent directors. Widely held companies in countries like the Netherlands were not exposed to the “market for corporate control”, but had developed forms of control that allowed them to combine blockholder control with stock market liquidity by deviating from “one-share-one-vote” (OSOV).
Because EASD cared about liquidity, it might have been expected that they would refrain from recommending against “control enhancing mechanisms” (as they came to be known), as long as they were properly disclosed. EASD’s committee recommended that “deviations from “one-share-one-vote” should be avoided and, where they exist, must be disclosed”.
In its 1998 Business Sector Advisory Group report, the OECD started to develop its own corporate governance principles on which EASD’s committee was represented. Although reluctant to adopt EASD’s views on directors also independent of blockholders, the OECD agreed to state “The board should be able to exercise objective judgement on corporate affairs independent, in particular, from management”.
When the Principles were revised in the wake of the Russia/Asia/Brazil financial crisis, the 2004 edition of the OECD Principles state more neutrally that “The board should be able to exercise objective independent judgement on corporate affairs”, the explanatory notes stating that “The manner in which board objectivity might be underpinned also depends on the ownership structure of the company.
The next project undertaken by EASD and ECGN was a comparison of corporate governance codes for the European Commission. This time, they teamed up with the New York based law firm Weil, Gotschal & Manges (WGM). Marco Becht had started an online codes collection for ECGN. By then, EASD had established pan-European credentials.
A more permanent footing
The next major turn in affairs came in 2000 when the Leo Goldschmidt Chair for Corporate Governance was established at the Solvay Business School and, through the ECGN connection, Colin Mayer was persuaded to launch the Chair. It was during this visit that the idea to turn ECGN into a more permanent organisation was born. Antonio Borges, then the Dean of INSEAD, was moving to Goldman Sachs in London and agreed to become Chair of the European Corporate Governance Institute (ECGI) which was officially registered in 2002.
The project often cited as the one with most impact is ECGI’s contribution to the European Commission commissioned study on one-share-one-vote. The study had four well defined parts: An institutional investor survey, some data collection, a legal survey and a survey of the academic literature. ECGI together with Institutional Shareholder Services (ISS) and the law firm Shearman & Sterling, put in a bid. The academic surveys contributed significantly to the European Commission’s decision to refrain from regulatory intervention in the control of listed companies in Europe. The arguments and evidence presented were fully accepted.
In 2013, efforts were made to put ECGI on a more permanent basis by raising an endowment through a parallel philanthropic foundation, the European Corporate Governance Research Foundation (ECGRF) the founding patrons of which were Investor AB (Sweden) and BP plc (UK). The Foundation, chaired by Professor E-L von Thadden, Rector of Mannheim University, was officially launched in 2016 at the Palace of the Academies in Belgium with the keynote address delivered by Nobel Laureate and ECGI founding member, Bengt Holmström.
In 2014, the Global Corporate Governance Colloquia (GCGC) association was established as an interdisciplinary (law, finance, economics and management) conference series, bringing together leading international scholars to debate current ideas in corporate governance research. The series is supported by twelve universities (Harvard, Oxford, Tokyo, Singapore, Frankfurt, Swedish House of Finance, London Business School, Columbia, Yale, Peking, Seoul, Stanford) together with a select group of corporate entities (Zurich AG, the European Investment Bank, Japan Exchange). The inaugural conference for this series took place in Stanford University in 2015.
Over the course of this great journey, the ECGI has developed a strong network of academics and practitioners from across the globe, and it has published over 860 Working Papers on vital, current topics. By 2017, it had acquired over 600 members from more than 57 different countries, has hosted over 22 international conferences, numerous workshops, and provided training for 18 doctoral students. It maintains a directory of international Corporate Governance Codes from over 100 jurisdictions and three of its 190 Research Members, Jean Tirole, Bengt Holmström and Oliver Hart, have won Nobel Prizes.
The road ahead for ECGI is one of transition, as it finds its place once again in a fast changing and sometimes unpredictable global environment. Under the Chairmanship of David Devlin, ECGI is looking both inward and outward to understand the changes necessary to continue the progress achieved by its founding members. In 2016, while maintaining the ongoing activities of ECGI, a new website was commissioned to streamline communications and access to important ECGI research. This new digital structure will allow for greater engagement between the institute and its members, while also strengthening the connection between researchers and practitioners in corporate governance. In addition, ECGI is advancing its engagement programme by introducing a Roundtable series which will take advantage of its strong network of knowledge and influence. The way forward also includes strong attention on Research, be that initiated by ECGI or by its members. The Board of ECGI, the Trustees of ECGRF, and the ECGI Research Committee are progressing a dialogue on the Research Agenda of ECGI with expected results in the coming twelve months.
It is against this backdrop that the ECGI recognises the innovative and inspiring spirit of the people involved, who are simply too many to mention, but who have contributed to the evolution of a global professional network so often compared to a family in the most collective sense.
I, Vanessa Koenig, am the author of this article, (History of ECGI), and I release its content under the terms of the GNU Free Documentation License, Version 1.2 and later, and under the terms of the Creative Commons Attribute Share-Alike