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accountability responsiveness.102 performance,






The scale of the crisis has produced a paradigmatic tipping point. The unprecedented nature of central bank intervention mirrors the admission by the chair of the most influential lobby group in investment banking he ‘no longer believe[s] in the market’s self-healing power’. 103 While it may be inopportune to engage in structural reform in the midst of a crisis, 104 it is clear that the normative advantages of embedding a corporate form of ‘associational democracy’ without reference or subservience to wider societal goals have been falsified.105 At a more fundamental level, the restraining power associated with enhanced transparency within and between each accountability dimension has also been eroded.106 The securitisation of risk was, after all, perfectly legal: the risks were disclosed but discounted by allegedly sophisticated investors, who, in the main, jettisoned reason in the search for yield. A more appropriate and integrated response is to enhance the narrative basis of accountability based on an agonistic understanding of what business integrity means in practice. To be effective this needs to transcend the desultory reality of the much vaunted but now partially discredited ‘comply or explain’ model of financial reporting advanced by the United Kingdom.107 This is not the impossible task it may appear. A useful precedent can be found in the indirect ways in which private equity was persuaded to enhance its accountability.

The transformative potential (and risk) of private equity occurs at a number of levels. The involvement of existing management in private equity bids creates intractable conflicts of interest. The processes through which initial exit is managed raise difficult questions about the efficacy of existing rules governing control transactions. The narrow focus on financial performance, alongside the shortened timeframes in which ownership is exercised, may produce short-term gains but negatively impact on the longer-term sustainability of the enterprise and its relationship with key internal and external stakeholders. Paradoxically, the primary

102 M Bovens, ‘Two Concepts of Accountability’ (Paper presented at the Kettering Foundation, Dayton, Ohio, 23 May 2008).

103 J Randall, ‘When the Going Gets Tough, Banks Yell for Nanny’, Daily Telegraph (London), 26 March 2008 (Online edition).

104 The Treasury Department in the United States has outlined planned major structural changes; see H Paulson, ‘Remarks on Modernizing the Financial Regulatory Structure’ (Speech delivered at US Treasury, Washington DC, 31 March 2008). This approach has been criticised by a leading New York investment banker as akin to “re-arranging the deckchairs on the Titanic” (Interview, New York City, 24 April 2008).

105 The strategic imperative governing contemporary regulatory design takes as a starting point the failure of ‘command and control’ as an ordering mechanism. Despite multiple examples of failure, across a range of regulatory settings, ‘associational governance’ remains proffered as a normative and practical improvement. For original formulation, see W Streeck and P Schmitter, ‘Community, Market, State – And Associations’ in W Streeck and P Schmitter (eds), Private Interest Government (1985) 1- 29; I Ayre and J Braithwaite, Responsive Regulation (1992); C Parker, The Open Corporation (2002); see, more generally, Power, above n 98 at 36-42.

106 For application to US financial market regulation, see O’Brien, above n 97; for wider critique suggesting that transparency does not necessarily improve oversight but rather can cloud it, see H Tsoukas, ‘The Tyranny of Light: The Temptations and Paradoxes of the Information Society’ (1997) 29 Futures 827.


See Kershaw, above n 100.


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