Wednesday, March 29, 2006

Out with the carrot and in with the big stick


The European Commission has a new prescription for corporate governance. It is to set aside telling companies how to govern business, and instead force them to let the markets see what they are doing.

Driven not by codes, but by the markets, European corporate governance is on a march towards convergence. It is a march that will be punctuated by European directives. But it is the resulting shareholder action that will stop the rot.

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