Abstract
On matters of governance, the people’s good is the highest law, as Cicero said two millennia ago. Unfortunately, these days personal greed has trumped the people’s good, enflaming the current governance crisis affecting our public, nonprofit, and private spheres. The spate of corporate governance scandals over the past several years jeopardizes equity investments, harms beneficiaries, and weakens global capital markets. The remedy is not just more laws and regulation but revitalization of the system of corporate checks and balances that already exists. To get better corporate governance, corporate shareowners, especially institutional investors, need to assert their rights and responsibilities more forcefully and wisely. Doing this involves better fiduciary leadership and governance, with the establishment of a fiduciary creed. This creed sets forth ethical stewardship beliefs, principles, and standards, thus enabling sound procedures and competence for discharging the fiduciary role. It does so in a manner that serves beneficiaries by balancing long-term financial prosperity with institutional mission and the public interest, rightly understood. Improving the governance and operation of institutional investors through better integration of their ideals and principles into their investment policies, along with greater levels of participation, representation, and accountability — exemplified by The Boston Foundation and recently proposed legislation affecting the $28 billion Massachusetts state pension funds — will put wasted assets to work, deter future abuse, and restore integrity and trust in equity culture. The author calls this “civic stewardship.”
This article originally appeared in a 2003 issue of the New England Journal of Public Policy (Volume 18, Issue 2): http://scholarworks.umb.edu/nejpp/vol18/iss2. For this reprint, the author has prepared an update, which is included after the conclusion of the original article.
Recommended Citation
Murninghan, Marcy
(2013)
"Common Sense and Civic Virtue: Institutional Investors, Responsible Ownership, and the Democratic Ideal,"
New England Journal of Public Policy: Vol. 24:
Iss.
1, Article 6.
Available at:
https://scholarworks.umb.edu/nejpp/vol24/iss1/6