Regulated Corporate Governance

Norges Bank Investment Management (NBIM), which manages $650 billion in assets, recently condemned the state of corporate governance, but not in a way in that most people would expect. Many of the recent regulations enacted to regulate corporate governance have arisen from the 1992 UK code of governance. This code was a statement of good governance practices. NBIM argues that converting the original code into laws and regulations is misguided because it changes guidelines for best practices into hard and fast rules that limit the direction of corporate governance. In short, NBIM believes that regulations are prescribing a one size fits all process for corporate governance that is unduly restrictive.