Prescience has defined The Finlay Centre for Corporate & Public Governance from the beginning. We correctly predicted the dangers of disengaged directors and excessive CEO pay, warning the U.S. Senate banking committee in 2002 that “oversized compensation too often tempts CEOs to take actions that artificially push up the price of the stock in ways that cannot be sustained, and to cash out before the inevitable fall.”  It was precisely that phenomenon that contributed to the worst recession since the Great Depression in 2008 and the costly firestorm of corporate scandals and bailouts that followed.

Through media interviews and op-ed columns, The Centre was the first to identify lapses in ethical conduct and boardroom practices on the part of Enron, Barings, BreX, Bear Stearns, Lehman Brothers, RT Capital, AIG, Livent, Nortel and Hollinger, among others. The Centre was also the first to bring to public attention failures in governance at the U.S. Federal Reserve System of New York. The Centre’s work in that regard was raised in the U.S. House of Representatives as the global financial crisis unfolded. It has been an unparalleled voice for higher standards of ethics and social responsibility in the conduct of boardroom decision-making and executive leadership in both the private and public sectors.

The Centre’s work and ideas have been frequently cited in debates in the House of Commons and the Senate of Canada, in scholarly articles and legal publications, and in dozens of best-selling books, including Peter C. Newman’s Titans and Rod McQueen’s Who Killed Confederation Life? and in top U.S. business sellers, like Ira T. Kay’s Myths and Realities of Executive Compensation and John Gillespie’s and David Zweig’s Money for Nothing.

Directors Who Do Not Direct

The continuing affliction of directors who do not direct not only erodes the moral authority of the boardroom but undermines the future of capitalism itself.  For more than a century there has been a revolving door of corporate mishap and board failure, slumbering directors who suddenly awake to disaster, promise reform, and then go back to sleep until the next calamity occurs.  It must be closed.  Legislation and rule-making doubtless have an important place in ensuring that boards will do their jobs.  In that regard, laws which focus on the abuses and excesses of stock options and which prescribe greater corporate disclosure may offer some immediate hope of eradicating a mentality where directors and CEOs are all ultimately drinking out of the same trough.  But more must be done, and much of it must come from within the business community itself.

— J. Richard Finlay in a Submission to the Committee on Banking, Housing and Urban Affairs, United States Senate (hearings leading to passage of Sarbanes Oxley Act of 2002).

Did Bear Stearns Really Have a Board?

“The directors of Bear Stearns were paid well for their duties –at least  $200,000 each. Management directors were paid in the tens of millions every year.  For that sum and under the board’s unhurried watch, shareholders and employees were given the privilege of witnessing the unthinkable: an 85-year-old institution that survived the Great Depression and two world wars sliding under the turbulent sea of subprime folly, leaving only a token reminder in its decimated share price that it once existed at all. 

“Where was the board?” is a question corporate governance scholars and others have increasingly come to inquire during times of corporate calamity.  It has been asked of many large failures over much of the past 100 years.  But for this most recent boardroom mishap an even more probing question needs to be posed:  If Bear Stearns had no chairman and no board at all, would the results have been any worse?”

— J. Richard Finlay, speaking at a conference on the Global Financial Meltdown, New York.


A cavalier attitude towards ethics may improve the bottom line for the short term but, for the long-term health of a firm and the securities industry, a strong commitment to managing conflicts of interest is necessary. Scandals in the marketplace harm the entire industry and have a deleterious effect on all participants. J. Richard Finlay of the Centre for Corporate & Public Governance commented recently on high closing allegations against some market participants.

“In my frequent conversations with employees in the securities industry, I am struck by the number who say that management conveys one message publicly about the importance of ethics, but privately seems to encourage a different set of performance standards when it comes to meeting the bottom line.”

— Final Report of the Securities Industry Committee on Analyst Standards

“Doch der kanadische Unternehmensexperte J. Richard Finlay sieht den derzeitigen Trend zum „Going Private“ mit großer Skepsis. Corporate Governance, also die Unternehmensführung unter Aufsicht, ist für Finlay nach wie vor die beste Methode, ethisches und verantwortungsvolles Verhalten an den Firmenspitzen zu gewährleisten. „Es ist kein Zufall, dass die größten Firmen mit der eindrucksvollsten Geschichte von Einkommen, Innovation und Fairness gegenüber den Anlegern, etablierte Aktiengesellschaften sind, die sich über lange Zeit entwickeln konnten.“ Private Beteiligungfirmen hingegen seien wie der Ozeandampfer „Titanic“: „Jeder glaubt, sie seien zu groß, um versagen zu können, und zu raffiniert, um nicht erfolgreich zu sein. Und dann, eines Morgens, wacht man auf und muss entdecken, dass das Undenkbare geschehen ist.”
—  J. Richard Finlay, from an interview in Germany’s Focus Magazine.