corporate governance

Is Tesco going green by being mean?

Is Tesco going green by being mean?

Tesco has proudly announced that it is the first UK retailer to offer sustainability-linked supply chain finance. That sounds great, well done Tesco! But wait a moment. What does this really mean? Supply chain finance is used when a company takes so long to pay its suppliers that they have to borrow money to finance themselves. Suppliers can borrow against the amount of money that Tesco owes them, but of course, the suppliers have to pay the...

Are Old Boys’ Networks used as a recruitment weapon against women?

Are Old Boys’ Networks used as a recruitment weapon against women?

A fascinating piece of academic business research1 was posted on Linkedin. Not normally an aficionado of academic papers2, I couldn’t resist reading it. The title ‘Role of Old Boys’ Network and Regulatory Approaches in the Selection Process for Female Directors’ lured me in. It promised fascinating research into gender diversity on boards, something I am passionate about. Now I don’t suppose they have a Trade Descriptions Act on academic...

Tesco’s Barnard Castle moment of truth

Tesco’s Barnard Castle moment of truth

Tesco, like Dominic Cummings, has a home in Durham, but not in Barnard Castle. Also, like the No10 guru, Tesco has come in for a lot of criticism about its application of the pandemic rules. It is banking £532m COVID-19 full year rates rebate, despite actually benefiting in many ways from the lockdown. As a result, it is now paying a bumper dividend up 21%. Is Tesco as short-sighted as Cummings? There are not many companies at the moment in the...

The Brydon Report – When looking backward should be the way forward

The Brydon Report – When looking backward should be the way forward

The much-awaited Brydon Report was published just before Christmas. It didn’t get much publicity, as the festive season proved more alluring than yet another long report and profusion of recommendations on corporate governance. In a sense, this was a pity as this ambitious report contained over 60 wide-ranging recommendations that would have considerable impact on auditors and boards. It also needs to be seen as part of an avalanche of changes...

Response to consultation on Market Study on Statutory Audit Services

Response to consultation on Market Study on Statutory Audit Services

I am responding to the request from the Government for views on the recommendations by the Competition and Markets Authority on the market for Statutory Audit Services. This submission is made in a purely personal capacity. Over the last 25 years, I have been chairman or director of ten different companies, from small privately owned to FTSE100, participating in over 200 audit committee meetings. I have never worked for an auditing firm, big or...

The Baked Bean Audit

The Baked Bean Audit

What if the government insisted that every time you bought a tin of Heinz baked beans, you had to buy at least half a tin of Crosse & Blackwell ones too? You would have to explain to the grocery regulator why you chose Heinz, and if it thought that your choice was the wrong one it would mandate you to buy differently, publicly shame you and even take control of your grocery shopping as a punishment. You might not feel so great about it, but...

The audit punch-bag: Where is the voice of industry?

The audit punch-bag: Where is the voice of industry?

Storm clouds are gathering over the audit market. Government, politicians, media and regulators are all queueing up to condemn companies and auditors over the few, but well-publicised, failures of certain companies. Lack of knowledge about the audit process is no bar to these opinion-formers. Meanwhile industry bodies are supine in defending business and signally failing to provide the missing knowledge as to what actually happens and what went...

Motherhood & apple pie – the latest corporate governance regulations for private companies

Motherhood & apple pie – the latest corporate governance regulations for private companies

The FRC has set out new proposals for more corporate governance regulation (the Wates Report) for large private companies. This is my response to the consultation. Summary High quality regulation should focus on outcomes and provide evidence to support new rules and principles. Both the government and the FRC seem to be impervious to either. The Wates proposals identify neither outcomes nor evidence. They require private companies to disclose...

To buy or not to buy, that is the question

To buy or not to buy, that is the question

Whether ‘tis nobler to buy back shares or pay a dividend?     Introduction Maybe Hamlet was not so concerned with shareholder distribution, but most modern company directors certainly are. In an earlier article I reviewed why and how companies make shareholder distributions and in particular pay dividends. However there is another form of distribution, the share buy-back. Share buy-backs Companies can purchase their own shares, using cash...

“Marking our homework” – Why executives resent non-execs

“Marking our homework” – Why executives resent non-execs

It won’t be long into your first non-executive job when you start to feel as if the executives resent you. It’s okay. You haven’t become paranoid. They really do resent you. Why? Being an executive director is a tough job. You work all the hours that the Working Time directive allows, then you opt out and work some more. The market is very tough and competitive, and you end up making numerous difficult decisions. You do this for a couple of...

New PM, but corporate governance is still a political punchbag

“I want to see changes in the way that big business is governed. The people who run big businesses are supposed to be accountable to outsiders, to non-executive directors who are supposed to ask the difficult questions, think about the long-term and defend the interests of shareholders. “In practice, they are drawn from the same, narrow social and professional circles as the executive team and – as we have seen time and time again – the...