State Owned Enterprises

This post explains the state-owned enterprise (SOE) governance and accountability framework in some more detail than my posts on state sector board governance (which noted that SOEs operate under a different legal framework from Crown entities in New Zealand) and on Crown companies (which noted that SOEs are just one category of company owned by the Crown).  It emphasises the features of SOEs that distinguish them from privately-owned companies.

Continue reading “State Owned Enterprises”

Director tenure and board reappointments

Long-serving directors bring a number of benefits to boards: they provide stability; they “know the business”; they are a repository of institutional memory; they will tend to have more governance experience generally, not just with this firm; they are more likely to attend, and to contribute to, board meetings and board committees; and their skills, abilities and contribution to the governance of the entity are known, tried and tested.  But how long is too long? Continue reading “Director tenure and board reappointments”

Political scenarios for the New Zealand Superannuation Fund

When we created the New Zealand Superannuation Fund, following the Labour Government coming into power in 1999, the concept was fairly simple: set aside surpluses from the “golden years” of the next decade or so and invest them efficiently so that funds are available to ease the budget adjustment a couple of decades later as fiscal pressures from population ageing and other factors rapidly started to bite. Continue reading “Political scenarios for the New Zealand Superannuation Fund”

Conflicts of interest — the broader context

The Institute of Directors in New Zealand has published a Practice Guide on recognising, declaring and managing conflicts of interest.  It provides an overview of how directors should recognise and manage conflicts of interest in the boardroom, using an “identify-declare-manage” framework.

This post sets out some other aspects of the broader context of conflicts of interest, not directly addressed in the Practice Guide, that directors should also have on their radar. Continue reading “Conflicts of interest — the broader context”

Diversity and board performance

The board’s fundamental role is to act in the best intuerests of the company and, in particular, to govern the company so that it creates and adds value.  This requires a governance culture that leads the company to identify and take advantage of change as its business environment continuously evolves.  That culture also needs to be able to actively and productively challenge and hold management to account, and to ensure effective compliance.  This requires a board of individual directors who, between them, can make a variety of different contributions while working together to direct the company.  That is how diversity contributes to board performance. Continue reading “Diversity and board performance”

Financial economics of racetrack betting

Racetrack betting has close parallels with investing on financial markets and provides a relevant context for investigating attitudes to risk and the informational efficiency of markets.  Differences in market prices (odds offered) across different markets (win, show, place, quinella, different bookmakers) whose payout (dividend) depends on the same risky outcome (a horse race) raise the prospect of arbitrage opportunities. Continue reading “Financial economics of racetrack betting”