Corporate Boards - How do good boards create value? And how are we different in the Nordics?

Research report on the Nordic corporate governance model

On 29 November 2017, HCCG arranged a research seminar on the Nordic corporate governance model. Professor Tom Berglund and Dr. Salla Pöyry presented an extensive research project conducted across the Nordic countries and mediated a panel discussion with Risto Murto (President and CEO Varma, Member of the Board Sampo Plc and Wärtsilä Corporation), Eeva Ahdekivi (CEO Hartwall Capital, Member of the Board Tikkurila Plc) and Philip Aminoff (Chairman of Board Helvar Merca and Helectron Ltd, Member of Board Veho Oy and other Aminoff family owned companies).

The presentation can be downloaded here.

Executive Summary of the Study

The research project Nordic Corporate Governance – An in-depth study of governance and board practices in 36 large companies was initiated with the ambition to try and explain how corporate governance works in the Nordic region across large companies, and how these procedures and processes have been shaped by regulation and legislature, as well as draw tentative conclusions on the extent and ways by which shareholders, board members and chairmen can influence the development of a company over time.

The project involved gathering an extensive empirical material based on more than 500 hours of in-depth interviews with around 250 board directors and CEOs in 36 Nordic mid- and large cap corporations.

The authors show that a company’s total ownership situation to a large extent determines how the governance process is organized and executed. The ownership dimension that matters most is its concentration and the strength of the mandate of the active owner representative (e.g. the autonomy and personal authority of the active owner representative). However, whether a corporation is owned privately or by the state (i.e. its form) also matters, as does the personality and direct engagement of the main owner. All those governance qualities are crucial in the Nordic environment, which enables owners to influence governance practices to a significant extent. The role and competence of the chairman emerged as a critical factor in shaping an effective board.

The empirical material lends support to the conclusion that each corporation has the opportunity to ‘tailor’ its own governance process and that the owners often use that possibility. Such an option exists because the Nordic Company Laws are written using fairly broad strokes, which is also generally deemed appropriate and beneficial, while the complementary soft regulations lack effectual sanctions.

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