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The individualization of corporate governance

Author

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  • Ian P. Dewing
  • Peter O. Russell

Abstract

Purpose - Under the Financial Services and Markets Act 2000, the Financial Services Authority (FSA) is the single regulator of firms in the UK financial services industry. The Act grants extensive powers to the FSA such that it can impose by rules and regulations additional corporate governance requirements on firms in the financial services industry. The legislative and regulatory requirements also extend to individuals under the FSA approved persons' regime. The purpose of the paper is to examine this individualization of corporate governance. Design/methodology/approach - The paper first explores the rise to significance of internal control and risk management in corporate governance and regulation, and links this to Beck's risk society and individualization theses. The extent of the individualization of corporate governance by the approved persons' regime is explored by examining three sources of evidence: the FSA's documents setting out the approved persons' regime; the initial perceptions about the implementation of the approved persons' regime from interviews with high‐level individuals in the financial services industry; and the outcomes of illustrative FSA enforcement actions against individuals. Findings - The findings are that the FSA has developed a comprehensive and formidable apparatus for the individualization of corporate governance in the UK's financial services industry. It is argued that a discourse based on the interpretive evaluations of internal control and risk management may be replacing a discourse based on the quantitative techniques of management accounting, which may be characterised as the demise of the “calculating self” and the rise of the “auditable self”. Practical implications - The FSA's approved persons' regime could be developed as a model for other areas of the private and public sectors, where for regulatory purposes it may be desirable to identify approved or official roles. Originality/value - The ability of regulators to “make” corporate governance by rules and regulations is relatively unexplored. Also, the focus of corporate governance is on firms rather than individuals. The paper considers the extension of corporate governance from the firm to the individual that may be achieved by regulation.

Suggested Citation

  • Ian P. Dewing & Peter O. Russell, 2008. "The individualization of corporate governance," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(7), pages 978-1000, September.
    • Handle: RePEc:eme:aaajpp:v:21:y:2008:i:7:p:978-1000
    DOI: 10.1108/09513570810907447
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    References listed on IDEAS

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    1. Baldwin, Robert & Cave, Martin & Lodge, Martin, 2011. "Understanding Regulation: Theory, Strategy, and Practice," OUP Catalogue, Oxford University Press, edition 2, number 9780199576098.
    2. Ian P. Dewing & Peter O. Russell, 2006. "Corporate Governance – Regulation and Reform: the actuarial governance of UK life insurers," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(3), pages 172-180, May.
    3. Bank of England, 1997. "A Risk Based Approach to Supervision (the RATE framework)," Consultative Papers _006, Bank of England.
    4. Ian P. Dewing & Peter O. Russell, 2004. "Regulation of UK Corporate Governance: lessons from accounting, audit and financial services," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(1), pages 107-115, January.
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    Cited by:

    1. Danilah Salleh Author_Email: danilah@uum.edu.my & Siti Nabiha Abdul Khalid, 2011. "Accountability Practice At Local Government Of Malaysia," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-253, Conference Master Resources.
    2. Sarah Boateng, 2016. "Information Disclosure And Bank Stability; Evidence From Sub-Saharan Africa," Proceedings of Economics and Finance Conferences 4206600, International Institute of Social and Economic Sciences.
    3. Adams, Mike & Jiang, Wei, 2016. "Do outside directors influence the financial performance of risk-trading firms? Evidence from the United Kingdom (UK) insurance industry," Journal of Banking & Finance, Elsevier, vol. 64(C), pages 36-51.
    4. Niamh M. Brennan & Jill Solomon, 2008. "Corporate governance, accountability and mechanisms of accountability: an overview," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(7), pages 885-906, September.
    5. Ian P. Dewing & Peter O. Russell, 2016. "Whistleblowing, Governance and Regulation Before the Financial Crisis: The Case of HBOS," Journal of Business Ethics, Springer, vol. 134(1), pages 155-169, March.

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