The Global Financial Crisis and the Companies Act 2006
Fri, 04 Nov 2011 11:02:00 GMT
Professsor Andrew Keay of the Law School at the University of Leeds made the short trip to Huddersfield to give the latest FEGReG seminar on Wednesday 2nd November 2011. A good-sized audience of staff and research students attended Professor Keay's excellent presentation, which was entitled "The Global Financial Crisis: Risk, Shareholder Pressure and Short-termism in Financial Institutions. Does Enlightened Shareholder Value Offer a Panacea?"
Professor Keay explained that excessive risk was a clear contributor to the global financial crisis and that it was itself a result of short-termism. Enlightened shareholder value (ESV) as encapasulated in the Companies Act 2006 is designed to encourage more of a long-term approach in companies and reduce short-termist pressures on directors. However, there is empirical evidence that suggests that ESV is not having this effect and it is felt that it is not likely to do so in the future because of a number of obstacles, such as the difficulties associated with enforcing directors' failure to implement ESV. It is unlikely, therefore, that this element of the Companies Act 2006 will be able to play a role in reducing the likelihood of a future financial crisis.
