ECGI - AGM 2002

ECGI Interim Report 2002

7 November 2002

INTRODUCTION

It is now some nine months since the ECGI was launched at the Bibliothèque Solvay. It is therefore an opportune moment to reflect on what we have achieved to date and to look forward to what is in store over the coming months.

Back in January, we were just beginning to understand some of the implications of what is now commonly referred to as the Enron scandal. That debacle and the subsequent troubles in other large, mainly American, corporations, has focussed more attention on corporate governance than we had imagined was possible when plans for a centre for research on European corporate governance issues were first mooted over a year ago.

These well publicised problems, combined with the downturn in equity markets, have encouraged companies, academics and the media to pay greater heed to corporate governance and to start recognising it as an important topic and discipline in its own right. Under these circumstances therefore, our formation and launch could not have been more timely.

A GROWING MEMBERSHIP

The ECGI's corporate and individual membership is growing daily. We have attracted many of Europe's leading companies as well as a large number of distinguished academic experts on the subject from Europe and elsewhere. The Institute's aims have also received backing from individuals outside academia, from practising lawyers and accountants to businessmen and trade association representatives.

Impressive though our membership is, we are constantly striving to increase it on the basis that the larger the membership, the more funds there will be available to pursue our aims. Whilst we have established contact with a large number of companies throughout Europe, with Business Schools and with other intermediaries such as trade associations and representative bodies, we have by no means exhausted the ranks of those for whom the Institute ought to represent a unique source of information and a fountain of research.

In seeking to expand our membership base, we would ask you, our members, to help us by talking about us to your colleagues and business acquaintances. We would ask you to encourage them to become members in their own right by pointing them in the direction of our website where there is an easy way not only to register interest but also to remit membership subscriptions online.

ACADEMIC ENDORSEMENT

A Committee chaired by Professor Bengt Holmström, Paul A Samuelson Professor of Economics, Department of Economics and Sloan School of Management, MIT has appointed 21 distinguished academics as inaugural Fellows of the Institute. They will provide intellectual leadership and inspiration for the Institute as we seek to achieve our aim of undertaking and disseminating research of the highest quality. A list of our Fellows appears on our website. The Committee will consider future nominations for ECGI Fellows on an annual basis, starting in 2003.

A Committee, chaired by Colin Mayer, Peter Moores Professor of Management Studies at the University of Oxford's Saïd Business School, has nominated 26 academics with a proven track record of research into corporate governance issues as Research Associates of the Institute. Their research output will be widely disseminated through the ECGI's working paper series, in the financial media and at workshops, seminars and conferences organised by the Institute

PUBLIC PLATFORM

The Institute got off to a good start judging by the quality and quantity of the audience that attended the ECGI launch in January. Over 200 people, drawn from companies, European Institutions, national governments, Corporate Governance committees, institutional investors, academics and the press attended the event which was sponsored by BP plc.

As ECGI Chairman, I opened the proceedings by explaining the rationale behind the formation of this new European Institute against the complex background of corporate governance in Europe.

André Sapir of the European Commission and the Centre for Economic Policy Research presented some recent research amongst FT Europe 500 Companies to determine the international composition of the boards of Europe's largest multinational companies.

Marco Becht, ECGI Executive Director, then presented the outline findings of recent research which appeared in the book The Control of Corporate Europe which he co-edited. A complimentary copy of this, published by Oxford University Press, was given to everyone who attended, courtesy of Chubb Insurance Company of Europe S.A. who subsequently also arranged for the first 100 new members to receive a free copy. There followed a debate on the topic "Do Large Shareholders make for Good Corporate Governance?"

Over the following four months, the ECGI organised three well attended sessions. In March at a 'Corporate Governance in Germany' event organised by Deutsche Bank, we compared systems of corporate governance in Anglo-Saxon countries and in Continental Europe.

In April, we organised a workshop, sponsored by the European Science Foundation, on 'Corporate Governance and the New Economy' in conjunction with CEPR and in collaboration with ECARES. In May, courtesy of the Federation of European Securities Exchanges (FESE), we brought together distinguished academics from the United States and Europe to debate the future of corporate takeovers in Europe at FESE's high level European Financial Markets Convention.

ENCOURAGING DEBATE AND DISCUSSION

Picking up the theme of the Takeover Directive, we have joined forces with the Financial Times in an online discussion forum that poses the question whether the EU should adopt a common takeover code. In keeping with our overall aim which is to make a constructive and formative contribution to the debate on the formulation of policy and development of best corporate governance practice, we have also devoted a large section of our website to this topic. This contains a set of reference pages that we hope will provide a basis for enlightened ongoing discussion.

The whole area of remuneration will get a similar treatment on our website in the near future. We welcome feedback from our members on what other topics they would like us to air.

If you have not already done so, we would encourage you to subscribe, free of charge, to the ECGI List. This is a user-friendly way of exchanging news and views as well a medium for discussion between academics and practitioners on the key issues that face all of us who are involved, in one way or another in corporate governance.

PUBLICATIONS

We have entered into an arrangement with the Social Science Research Network (SSRN) whereby the ECGI can participate in the SSRN's Financial and Legal Research Institutes Papers Series. In the very near future, we will be publishing six working papers, three in the law series and three in the financial series. Available online free of charge from the SSRN website or, in certain cases from our own, these working papers will also be published in hard copy.

We have also recently made an arrangement with Oxford University Press, whereby a selection of their books on corporate governance can be bought by members at a substantial discount. We are hoping to make similar arrangements with other publishers.

A VIRTUAL CENTRE OF EXCELLENCE

In June, we submitted an Expression of Interest with regard to the setting up of a Virtual Centre of Excellence (VCE) under the EU 6th Framework Protocol. Corporate governance is explicitly mentioned as a priority theme under this Framework Protocol and the Commission will only fund one VCE per topic. The ECGI is, therefore, competing with other disciplines and other priority themes for the Commission's attention. We have put a considerable amount of effort into pulling together all the best researchers, academic research centres, think tanks, business and government organisations with expertise on corporate governance in order to seize the opportunity of obtaining this funding for pan-European collaboration and research on this important topic. 

The Commission is expected to publish formal calls for proposals in November 2002 and we are hoping that the subject of corporate governance, on its own or as part of a broader theme, will be included.

OUR WEBSITE

Nowadays, one of the first actions of a new organisation is to get a website. The ECGI has been no exception to this rule. We have tried to make our website at www.ecgi.org user-friendly and at the same time both a comprehensive and accessible portrait of Institution. We may be succeeding because it already receives a considerable number of hits, regularly attracting over 10,000 visits per month. In September, there were nearly 17,000 visits to the site. We aim to keep the site up to date with all our latest news so please make sure you check it regularly.

CODES AND PRINCIPLES

But our website needs to do more and over the coming months we hope it will also become a pre-eminent source of the highest quality information and research on corporate governance.

In some small way, it is already achieving this through its unique and comprehensive listing of worldwide corporate governance codes. Those of you who visit the website regularly will have noticed that there has recently been a substantial revision of the Codes and Principles section. We have filled in a few gaps and we are constantly adding to the database as new codes are published. We rely on our members to alert us to any new codes or ones that are missing from this wide-ranging collection.

THE GENERAL ASSEMBLY

We are finalising plans to hold the first General Assembly on Wednesday 15 January 2003 in Brussels. Fortis has kindly agreed to host the General Assembly which will start at 17.00, to be followed by a panel discussion on "The Future of European Corporate Governance Post-Enron". Please make a note of this date in your diaries. Further details will be published nearer the time and every member will receive a personal invitation to attend.

KEEPING IN TOUCH WITH OUR MEMBERS    

The next report will be delivered at the General Assembly and a copy will be sent to those who, for one reason or another, cannot attend. It will emphasise our projects in 2003 and the longer term strategic outlook of the Institute. I would like to emphasise that we genuinely welcome your feedback on any topic. After all, the Institute exists primarily for the benefit of its members.

I strongly urge you to help us shape the ECGI's future and to contribute to the much wider goal of improving understanding and the exercise of the highest standards in corporate governance.

Antonio Borges, Vice Chairman and Managing Director, Goldman Sachs International, Chairman ECGI
7 November 2002