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Chairman

Chairman

A chairman is the presiding officer of a meeting, organization, committee, or other deliberative body. In order to avoid what some see as sexist assumptions, the position is nowadays sometimes called chairperson or simply the chair. Alternatively, the title of chairwoman is sometimes used if the incumbent is female.

As a Role

It is their responsibility to determine the final agenda for each meeting, and ensure that everyone operates within, and addresses issues raised in it, in an efficient manner and in accordance with any previously agreed rules - the rules of order of that meeting, which are usually defined for the group. A rotating chair is a person who has the job only for that meeting and will cede it to another for the next meeting.

As a Position

So far as the boards of public companies are concerned, the role of the Chairman of the board as distinct from that of the company's Chief Executive Officer or Managing Director has in recent times been brought into focus, as the result of alleged corporate governance shortcomings observed in companies in which the two roles are combined. A pivotal document setting out recommendations is the Cadbury Report, the recommendations of which have been adopted to greater or lesser extent by the European Union, USA, the World Bank and others. It is common for board members to hold memberships of several boards and committees at one time. Diversifying board memberships gives a broader sense of what is appropriate and "fitting" when making decisions. The chairman is selected by the shareholders. A chairman's role is often building a consensus from what can be very different initial points of view. The chairman therefore has to be fair to all: a good listener and a good communicator.

Other uses

In the People's Republic of China the title of "Chairman" is often used interchangeably with that of president (ex: Chairman Mao). Category:Management occupations Category:Parliamentary law ja:会長

Meeting

s.]] In a meeting, two or more people come together, in particular to have discussions, often in a formalized way. Instead of coming together physically (in real life, face to face), also communication lines and equipment can be set up to have a discussion between people at different locations, e.g. a conference call or an e-meeting. In organizations, meetings are an important vehicle for human communication. They are so common and pervasive in organizations, however, that many take them for granted and forget that, unless properly planned and executed, meetings can be a terrible waste of precious resources. Because of their importance, a career in professional meeting planning has emerged in recent years.

Topics in meetings

- Facilitation
- Open space conference

Types of meeting

- Staff meeting -- typically a meeting between a manager and those that report to the manager (possibly indirectly).
- Team meeting -- a meeting among colleagues working on various aspects of a team project.
- Ad-hoc meeting -- a meeting called together for a special purpose
- Management meeting -- a meeting among managers
- Board meeting -- a meeting the Board of directors of an organization
- One to one meeting -- a meeting between two individuals

Meeting styles

- stand-up meeting
- breakfast meeting
- off-site meeting

Seven rules for meetings

Training material for how to hold an effective meeting often lists rules such as: 1. Be clear about the meeting’s objective 2. Create a solid agenda 3. Prepare in advance 4. Discussion-management process 5. Use of time 6. Plan, discuss and assign roles 7. Pre- and post-meeting communication

External links

- [http://www.mpiweb.org Meeting Professionals International (MPI)]
- [http://www.pmpn.com/planners.htm Professional Meeting Planners Network]
- [http://www.3m.com/meetingnetwork/ The 3M Meeting Network]
- http://crs.uvm.edu/citizens/meeting.htm category:Meetings category:Management category:Organizational studies and human resource management ja:会議

Organization

:Alternative meaning: Organisation (band). An organisation (Commonwealth English) or organization (American English, and Oxford English) is a formal group of people with one or more shared goals. This topic is a broad one. Organisations are studied by researchers from several disciplines: sociology, economics, political science, psychology, engineering, etc. The area is commonly referred to as organisation theory, organisational behaviour or organisation analysis. it however consists of a number of different theories and perspectives, some of which are compatible and others that are competing. Among those that are or have been most influential are:
- Weberian organisation theory (referring to Max Weber's chapter on Bureaucracy in his book 'Economy and Society'
- Marxist organisation analysis
- Scientific Management (mainly following Frederick W Taylor)
- Human Relations Studies (going back to the Hawthorne studies, Maslow and Hertzberg)
- Administrative theories (with work by e.g. Henri Fayol and Chester Barnard)
- Contingency theory
- New institutionalism and new institutional economics
- Network analysis
- Economic Sociology
- Organisation ecology (or demography of organisations)
- Transaction cost economics
- Agency theory (sometimes called principal - agent theory)
- Studies of organisation culture
- Postmodern organisation studies
- Labour Process Theory
- Critical Management Studies
- Unicist Natural Organisation The most prestigious scientific journals focused on the study of organisations include organisation, Organisation Studies, Administrative Science Quarterly and Academy of Management Review. "Organisation" can also be used to define how the different parts of computer hardware are linked in order to execute the many computational activities most efficiently. Organisations that are legal entities: government, international organisation, non-governmental organisation, armed forces, corporation, partnership, charity, not-for-profit corporation, cooperative, university. The study of organisations includes a focus on optimising [organisational structure]. According to management science, most human organisations fall roughly into four types:
- Pyramids or hierarchies
- Committees or juries
- Matrix organisations
- Ecologies Organisation studies also includes research efforts to inform the effective management of organisations, and addresses organisational culture, organisational learning and managing change as major factors affecting organisational effectiveness, beyond the basics of organisational structure.

Pyramids or hierarchies

A hierarchy exemplifies an arrangement with a leader who leads leaders. This arrangement is often associated with bureaucracy. Hierarchies were satirised in The Peter Principle (1969), a book that introduced the term hierarchiology and the saying that "in a hierarchy every employee tends to rise to his level of incompetence". An extremely rigid, in terms of responsibilities, type of organisation is exemplified by Führerprinzip.

Committees or juries

These consist of a group of peers who decide as a group, perhaps by voting. The difference between a jury and a committee is that the members of the committee are usually assigned to perform or lead further actions after the group comes to a decision, whereas members of a jury come to a decision. In common law countries legal juries render decisions of guilt, liability and quantify damages; juries are also used in athletic contests, book awards and similar activities. Sometimes a selection committee functions like a jury. In the middle ages juries in continental Europe were used to determine the law according to consensus amongst local notables. Committees are often the most reliable way to make decisions. Condorcet's jury theorem proved that if the average member votes better than a roll of dice, then adding more members increases the number of majorities that can come to a correct vote (however correctness is defined). The problem is that if the average member is worse than a roll of dice, the committee's decisions grow worse, not better! Staffing is crucial. Parliamentary procedure, such as Robert's Rules of Order, helps prevent committees from engaging in lengthy discussions without reaching decisions.

Staff organisation or cross-functional team

A staff helps an expert get all his work done. To this end, a "chief of staff" decides whether an assignment is routine or not. If it's routine, he assigns it to a staff member, who is a sort of junior expert. The chief of staff schedules the routine problems, and checks that they are completed. If a problem is not routine, the chief of staff notices. He passes it to the expert, who solves the problem, and educates the staff -- converting the problem into a routine problem. In a "cross functional team," like an executive committee, the boss has to be a non-expert, because so many kinds of expertise are required.

Matrix organisation

This organisational type assigns each worker to two bosses in two different hierarchies. One hierarchy is "functional" and assures that each type of expert in the organisation is well-trained, and measured by a boss who is super-expert in the same field. The other direction is "executive" and tries to get projects completed using the experts. Projects might be organised by regions, customer types, or some other schema. See matrix management.

Ecologies

This organisation has intense competition. Bad parts of the organisation starve. Good ones get more work. Everybody is paid for what they actually do, and runs a tiny business that has to show a profit, or they are fired. Companies who utilise this organisation type reflect a rather one-sided view of what goes on in ecology. It is also the case that a natural ecosystem has a natural border - ecoregions do not in general compete with one another in any way, but are very autonomous. The pharmaceutical company GlaxoSmithKline talks about functioning as this type of organisation in [http://www.guardian.co.uk/business/story/0,3604,1294443,00.html this external article] from The Guardian.

"Chaordic" organisations

The chaordic model of organising human endeavours emerged in the [1990]s, based on a blending of chaos and order (hence "chaordic"), comes out of the work of Dee Hock and the creation of the VISA financial network. Blending democracy, complex system, consensus decision making, co-operation and competition, the chaordic approach attempts to encourage organisations to evolve from the increasingly nonviable hierarchical, command-and-control models. Similarly, see Emergent organisations, and the principle of self-organisation. See also group entity for an anarchist perspective on human organisations.

References

- Organisations by Richard Scott: ISBN 0132663546
- Organisations and Institutions by Richard Scott
- Understanding organisations by Charles Handy.
- The Peter Principle, Dr. Laurence J. Peter and Raymond Hull, Pan Books 1970 ISBN 0-330-02519-8
- The Nature of the Firm by Ronald Coase.

External links

- [http://www.globaldharma.org Website of Global Dharma Center, a not-for-profit organisation offering (free) training modules, research papers, workshop exercises etc on Culture Development and Individual/Organisation Transformation] Category:Organizational theory

Committee

A committee is a (relatively) small group that can serve one of several functions:
- Governance: in organizations too large for all the members to participate in decisions affecting the organization as a whole, a committee (such as a Board of Directors) is given the power to make decisions. A committee of this type is a form of a deliberative assembly.
- Coordination: individuals from different parts of an organization (for example, all senior vice presidents) might meet regular to discuss developments in their areas, review projects that cut across organizational boundaries, talk about future options, etc. Where there is a large committee, it's common to have smaller committees with more specialized functions - for example, Boards of Directors of large corporations typically have an (ongoing) audit committee, finance committee, compensation committee, etc.
- Research and recommendations: committees are often formed to do research and make recommendations on a potential or planned project or change. For example, an organization considering a major capital investment might create a committee of several people to review options and make recommendations to upper management or the Board of Directors. Such committees are typically dissolved after issuing recommendations (often in the form of a final report).
- Project management: while it is generally considered poor management to give operational responsibility to a committee to actually manage a project, this is not unknown. The problem is that no single person can be held accountable for poor performance of the committee, particularly if the chairperson of the committee is seen as a facilitator. It is common for a chairperson to organize a committee meeting through an agenda, which is usually distributed in advance. The chairperson is responsible for running meetings: keeping the discussion on the appropriate subject, recognizing members (calling on them to speak) [often omitted in smaller committees], and calling for votes after a debate has taken place [formal voting is normally only done in committees involved in governance]. Governance committees often have formal processes (for example, they might follow Roberts Rules of Order); other types of committees typically operate informally, with the chairperson being responsible for deciding how formal the committee processes will be. Minutes, a record of the discussion and decisions of the meeting, are often taken by a person designated as the secretary of the committee; they may be legally obligatory (again, typically for governance committees). For committees that meet regularly, the minutes of the most recent meeting are often circulated to committee members before the next meeting. Committees may meet on a regular basis, often weekly or yearly, or meetings may be called irregularly as the need arises. During an emergency, a committee may meet more than once per day, or sit in permanent session, as, for example, ExComm (the President's Executive Committee) did during the Cuban missile crisis. A committee that is a subset of a larger committee is called a subcommittee. [Where the larger group has a name other than "committee" - for example, "Board" or "Commission", the smaller group(s) would be called committee(s), not subcommittee(s)] For organizations where the Board of Directors is large - say 20 people or more - it's common to have an Executive Committee, of Board members, which is authorized to make some decisions on behalf of the entire Board. Committees, both permanent and ad hoc (unofficial), appear both in representative democracies and in non-democratic structures. They may bear titles such as Commission, Board, Council, Presidium, or Politburo. Unofficial committees often get unflattering labels such as junta, camarilla or cabal. Committees are a necessary aspect of organizations of any significant size (say, more than 15 or 20 people). They keep the number of participants managable; with larger groups, either many people do not get to speak (and feel left out), or discussions are quite lengthy (and many participants find them duplicative and often boring). Committees are a way to formally draw together people of relevant expertise from different parts of an organization who otherwise would not have a good way to share information and coordinate actions. They may have the advantage of widening viewpoints and sharing out responsibilities. Their disadvantages appear in the possibilities for procrastination, undesirable compromises in order to build consensus, and groupthink, where (valid) objections or disconfirming evidence is either not voiced or is ignored. Moreover, the need to schedule a meeting, get enough committee members together to have a quorum, and debate until a majority agrees on a course of action, can result in undesirable delays in taking action. (A common joke, in organizations, is that when someone doesn't want to make an unpopular decision, he/she creates a committee to study the question.) Some famous committees include:
- Committee of Public Safety
- Central Committee (of a Communist party)
- House Un-American Activities Committee and other U.S. Congressional committees Notable subcommittees include:
- Subcommittee on Human Rights of the Committee on Foreign Affairs of the European Parliament Category:Meetings Category:Parliamentary law Category:Politics

Deliberative body

A deliberative assembly is an organization, comprising members, that uses a parliamentary procedure for making decisions. The following are common types of deliberative assemblies:
- The Mass Meeting
- The Local Assembly of an Organized Society
- The Convention
- The Legislative Body
- The Board A committee is a type of small deliberative assembly that is subordinate to another deliberative assembly. A deliberative assembly may have different classes of members. Common classes are voting members (also known as regular members), who have the right to vote, ex-offico members, and honorary members. A deliberative assembly may, or may not be, representative. For example, a board is comprised of elected representatives; but there are no representatives in a mass meeting of members.

Agenda

Agenda may refer to:
- agenda - points to be discussed.
- political agenda
- Agenda, Kansas
- Agenda, Ashland County, Wisconsin
- AGENDA (band) - a Montréal, Canada based indie rock band.
- Lotus Agenda - Personal Information Manager software from Lotus Development
- AGENDA - IT Consulting Firm http://www.agenda-asia.com/

Rules of order

Rules of order, also known as standing orders or rules of procedure, are the written rules of parliamentary procedure adopted by a deliberative assembly, which detail the processes used by the body to make decisions. Some bodies rely more on precedent and on the judgment of the presiding officer, whereas others rely more heavily on the written rules. Rules of order consist of rules written by the body itself, but also usually supplemented by a published parliamentary authority adopted by the body. Typically, national, state, and other full-scale legislative assemblies have extensive internally written rules of order, whereas non-legislative bodies write and adopt a limited set of specific rules as the need arises. In the United States, most state legislatures follow Mason's Manual of Legislative Procedure. The United States Senate follows the Standing Rules of the Senate. Most other deliberative assemblies follow Robert's Rules of Order. US organizations dedicated to promoting the general use of parliamentary procedure include the National Association of Parliamentarians and the American Institute of Parliamentarians. In the United Kingdom, Thomas Erskine May's A Practical Treatise on the Law, Privileges, Proceedings and Usage of Parliament (often referred to simply as Erskine May) is the accepted authority on the powers and procedures of the Westminster parliament. In Québec, commonly used rules of order for ordinary societies include Victor Morin's Procédures des assemblées délibérantes (commonly known as the Code Morin) and the Code CSN.

Common Parliamentary Authorities

- Cannon's Concise Guide to Rules of Order by Hugh Cannon
- Demeter's Manual of Parliamentary Law and Procedure by George Demeter
- [http://www.aph.gov.au/house/pubs/PRACTICE/Index.htm Australian House of Representatives Practice]
- [http://www.constitution.org/tj/tj-mpp.htm Jefferson's Manual of Parliamentary Practice] by Thomas Jefferson
- Mason's Manual of Legislative Procedure by Paul Mason
- A Practical Treatise on the Law, Privileges, Proceedings and Usage of Parliament (a.k.a. Erskine May) by Thomas Erskine May
- Robert's Rules of Order by Henry M. Robert
- The Standard Code of Parliamentary Procedure by Alice Sturgis
- Webster's New World: Robert's Rules of Order Simplified and Applied by Robert McConnell Productions

External links

- [http://www.ncsl.org/programs/legman/aBOUT/masons.htm Using Mason's Manual — National Conference of State Legislatures (ncsl.org)]
- [http://www.parliamentarians.org/ National Association of Parliamentarians (parliamentarians.org)]
- [http://www.parliamentaryprocedure.org/ American Institute of Parliamentarians (parliamentaryprocedure.org)]
- [http://www.parli.com/ Robert McConnell Productions (parli.com)] Category:Parliamentary law

Chairman of the board

The phrase Chairman of the Board has several meanings:
- Chairman of the Board is the term used to denote the leader of a corporation's board of directors. See Chairman.
- American singer Frank Sinatra (1915-1998) is referred to by the nickname "The Chairman of the Board."
- Chairman of the Board is the title of a 1998 movie starring Courtney Thorne-Smith and Carrot Top.
- "Chairmanoftheboard" is a race horse that won the Cane Pace in 1985. In medieval times the head of the household was the only member with a chair (with arms); all others sat on a bench. The "board" refers to the table.

Corporate governance

Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the goals for which the corporation is governed. The principal players are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large. Corporate governance is a multi-faceted subject. An important part of corporate governance deals with accountability, fiduciary duty and mechanisms of auditing and control. In this sense, corporate governance players should comply with codes to the overall good of all constituents. Another important focus is economic efficiency, both within the corporation (such as the best practice guidelines) as well as externally (national institutional frameworks). In this "economic view", the corporate governance system should be designed in such a way as to optimize results. Some argue that the firm should act not only in the interest of shareholders, but also of all the other stakeholders. Recently there has been considerable interest in the corporate governance practices of modern corporations, particularly since the high-profile collapses of firms such as Enron Corporation.

Definition

The term corporate governance has come to mean many things. It may describe:
- the processes by which companies are directed and controlled
- encouragement of companies' compliance with codes (as in corporate governance guidelines)
- investment technique based on active ownership (as in corporate governance funds)
- a field in economics, which studies the many issues arising from the separation of ownership and control At its broadest, corporate governance encompasses the framework of rules, relationships, systems and processes within and by which fiduciary authority is exercised and controlled in corporations. Relevant rules include applicable laws of the land as well as internal rules of a corporation. Relationships include those between all related parties, the most important of which are the owners, managers, directors of the board (when such entity exists), regulatory authorities and to a lesser extent employees and the community at large. Systems and processes deal with matters such as delegation of authority, performance measures, assurance mechanisms, reporting requirements and accountabilities. In this way, the corporate governance structure spells out the rules and procedures for making decisions on corporate affairs. It also provides the structure through which the company objectives are set, as well as the means of attaining and monitoring the performance of those objectives. Issues of fiduciary duty and accountability are often discussed within the framework of corporate governance. Whilst the term has a descriptive content, it is commonly used in an aspirational sense, by way of holding out a model which practice should seek to emulate. Reference can be made in this regard to various statements of corporate governance principles or guidelines, both hortatory and prescriptive. As a result of the separation of stakeholder influence from control in modern organisations, a system of corporate governance controls is implemented on behalf of stakeholders to reduce agency costs and information asymmetry. Corporate governance is used to monitor whether outcomes are in accordance with plans; and to motivate the organisation to be more fully informed in order to maintain or alter organisational activity. Primarily though, corporate governance is the mechanism by which individuals are motivated to align their actual behaviours with the overall corporate good (ie maximum aggregate value generated by the organisation and shared fairly amongst all participants).

History

In the 19th century, state corporation law enhanced the rights of corporate boards to govern without unanimous consent of shareholders in exchange for statutory benefits like appraisal rights, in order to make corporate governance more efficient. Since that time, and because most large publicly traded corporations in America are incorporated under corporate administration friendly Delaware law, and because America's wealth has been increasingly securitized into corporate entities, the rights of owners and shareholders have become derived and dissipated. The concerns of shareholders over administration pay and stock losses periodically has led to more frequent calls for Corporate Governance reforms. In the first half of the 1990's the issue of corporate governance received considerable press attention due to the wave of CEO dismissals (e.g.: IBM, Kodak, Honeywell) by their boards. CALPERS led a wave of shareholder activism, as a way to ensure that value would not be destroyed by the traditionally cozy relationship between the CEO and the boards of directors. In the second half of the 1990's, during the Asian financial crisis, a lot of the attention fell into the corporate governance systems of the developing world.

Parties to corporate governance

Parties involved in corporate governance include the governing or regulatory body (e.g. the U.S. Securities and Exchange Commission), the Chief Executive Officer, the board of directors, management and shareholders. Other stakeholders who take part include suppliers, employees, creditors, customers and the community at large. In corporations, the principal (shareholder) delegates decision rights to the agent (manager) to act in the principal's best interests. This separation of ownership from control implies a loss of effective control by shareholders over managerial decisions. Partly as a result of this separation between the main two parties, a system of corporate governance controls is implemented to assist in aligning the incentives of managers with those of shareholders, in order to limit the self-satisfying opportunities for managers. With the significant increase in equity holdings of institutional investors, there has been an opportunity for a reversal of the separation of ownership and control problems because ownership is not so diffuse. A board of directors often plays a key role in corporate governance. It is their responsibility to endorse the organisation's strategy, develop directional policy, appoint, supervise and remunerate senior executives and to ensure accountability of the organisation to its owners and authorities. Individuals may be members of the board of directors of multiple corporations. All parties to corporate governance have an interest, whether direct or indirect, in the effective performance of the organisation. Directors, workers and management receive salaries, benefits and reputation; whilst shareholders receive capital return. Customers receive goods and services; suppliers receive compensation for their goods or services. In return these individuals provide value in the form of natural, human, social and other forms of capital. A key factor in an individual's decision to participate in an organisation (e.g. through providing financial capital or expertise or labor) is trust that they will receive a fair share of the organisational returns. If some parties are receiving more than their fair return (e.g. exorbitant executive remuneration), then participants may choose to not continue participating...potentially leading to organisational collapse (e.g. shareholders withdrawing their capital). Corporate governance is the key mechanism through which this trust is maintained across all stakeholders.

Principles

Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organisation. Of importance is how directors and management develop a model of governance that aligns the values of the corporate participants and then evaluate this model periodically for its effectiveness. In particular, senior executives should conduct themselves honestly and ethically, especially concerning actual or apparent conflicts of interest, and disclosure in financial reports. Commonly accepted principles of corporate governance include:
- Rights of, and equitable treatment of, shareholders: Organisations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and accessible and encouraging shareholders to participate in general meetings.
- Interests of other stakeholders: Organisations should recognise that they have legal and other obligations to all legitimate stakeholders.
- Role and responsibilities of the board: The board needs a range of skills and understanding - to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors. The key roles of chairperson and CEO should not be held by the same person.
- Integrity and ethical behaviour: Organisations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that systemic reliance on integrity and ethics is bound to eventual failure.
- Disclosure and transparency: Organisations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organisation should be timely and balanced to ensure that all investors have access to clear, factual information. Issues involving corporate governance principles include:
- oversight of the preparation of the entity's financial statements
- internal controls and the independence of the entity's auditors
- review of the compensation arrangements for the chief executive officer and other senior executives
- the way in which individuals are nominated for positions on the board
- the resources made available to directors in carrying out their duties
- oversight and management of risk

Mechanisms and controls

Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. For example, to monitor managers' behaviour, an independent third party (the auditor) attests the accuracy of information provided by management to investors. An ideal control system should regulate both motivation and ability.

Internal corporate governance controls

Internal corporate governance controls monitor activities and then take corrective action to accomplish organisational goals. Examples include:
- Monitoring by the board of directors: The board of directors, with its legal authority to hire, fire and compensate top management, safeguards invested capital. Regular board meetings allow potential problems to be identified, discussed and avoided. Whilst non-executive directors are thought to be more independent, they may not always result in more effective corporate governance. Different board structures are optimal for different firms. Moreover, the ability of the board to monitor the firm's executives is a function of its access to information. Executive directors possess superior knowledge of the decision-making process and therefore evaluate top management on the basis of the quality of its decisions that lead to financial performance outcomes, ex ante. It could be argued, therefore, that executive directors look beyond the financial criteria.
- Remuneration: Performance-based remuneration is designed to relate some proportion of salary to individual performance. It may be in the form of cash or non-cash payments such as shares and share options, superannuation or other benefits. Such incentive schemes, however, are reactive in the sense that they provide no mechanism for preventing mistakes or opportunistic behaviour, and can elicit myopic behaviour.
- Audit committees

External corporate governance controls

External corporate governance controls encompass the controls external stakeholders exercise over the organisation. Examples include:
- debt covenants
- external auditors
- government regulations

Systemic problems of corporate governance

- Supply of accounting information: Financial accounts form a crucial link in enabling providers of finance to monitor directors. Imperfections in the financial reporting process will cause imperfections in the effectiveness of corporate governance. This should, ideally, be corrected by the working of the external auditing process, but lack of auditor independence may prevent this.
- Demand for information: A barrier to shareholders using good information is the cost of processing it, especially to a small shareholder. The traditional answer to this problem is the efficient market hypothesis, which suggests that the small shareholder will free-ride on the judgements of larger professional investors. However, there is an expanding empirical literature on apparent departures from this.
- Monitoring costs: In order to influence the directors, the shareholders must combine with others to form a significant voting group which can pose a real threat of carrying resolutions or appointing directors at a general meeting. The costs of combining in this way might well be prohibitive relative to the benefits.

Role of the accountant

Financial reporting is a crucial element necessary for the corporate governance system to function effectively. Accountants and auditors are the primary providers of information to capital market participants. The directors of the company should be entitled to expect that management prepare the financial information in compliance with statutory and ethical obligations, and rely on auditors' competence. Current accounting practice allows a degree of choice of method in determining the method of measurement, criteria for recognition, and even the definition of the accounting entity. The exercise of this choice to improve apparent performance (popularly known as creative accounting) imposes extra information costs on users. In the extreme, it can involve non-disclosure of information. One area of concern is whether the accounting firm acts as both independent auditor and management consultant to the firm they are auditing. This may result in a conflict of interest which places the integrity of financial reports in doubt due to client pressure to appease management. The power of the corporate client to initiate and terminate management consulting services and, more fundamentally, to select and dismiss accounting firms contradicts the concept of an independant auditor. The Enron collapse is an example of misleading financial reporting. Enron concealed huge losses by creating illusions that a third party was contractually obliged to pay the amount of any losses. However, the third party was an entity in which Enron had a substantial economic stake. In discussions of accounting practices with Arthur Andersen, the partner in charge of auditing, views inevitably led to the client prevailing. However, good financial reporting is not a sufficient condition for the effectiveness of corporate governance if users don't process it, or if the informed user is unable to exercise a monitoring role due to high costs (see Systemic problems of corporate governance above).

Regulation

See regulation.

Self-regulation

Rules versus principles

Rules are typically thought to be simpler to follow than principles, demarcating a clear line between acceptable and unacceptable behaviour. Rules also reduce discretion on the part of individual managers or auditors. In practice rules can be more complex than principles. They may be ill-equipped to deal with new types of transactions not covered by the code. Moreover, even if clear rules are followed, one can still find a way to circumvent their underlying purpose - this is harder to achieve if one is bound by a broader principle.

Enforcement

Enforcement can affect the overall credibility of a regulatory system. They both deter bad actors and level the competitive playing field. Nevertheless, greater enforcement is not always better, for taken too far it can dampen valuable risk-taking.

Corporate governance models around the world

There are many different models of corporate governance around the world. These differ according to the variety of capitalism in which they are embedded. The liberal model that is common in Anglo-American countries tends to give priority to the interests of shareholders. The coordinated model that one finds in Continental Europe and Japan also recognizes the interests of workers, managers, suppliers, customers, and the community. Both models have distinct competitive advantages, but in different ways. The liberal model of corporate governance encourages radical innovation and cost competition, whereas the coordinated model of corporate governance facilitates incremental innovation and quality competition. In the United States, a corporation is governed by a board of directors, which has the power to choose an executive officer, usually known as the chief executive officer. The CEO has broad power to manage the corporation on a daily basis, but needs to get board approval for certain major actions, such as hiring his/her immediate subordinates, raising money, acquiring another company, major capital expansions, or other expensive projects. Other duties of the board may include policy setting, decision making, monitoring management's performance, or corporate control. The board of directors is nominally selected by and responsible to the shareholders, but the bylaws of many companies make it difficult for all but the largest shareholders to have any influence over the makeup of the board; normally, individual shareholders are not offered a choice of board nominees among which to choose, but are merely asked to rubberstamp the nominees of the sitting board. Perverse incentives have pervaded many corporate boards in the developed world, with board members beholden to the chief executive whose actions they are intended to oversee. Frequently, members of the boards of directors are CEO's of other corporations, which some see as a conflict of interest.

Codes and guidelines

Corporate governance principles and codes have been developed in different countries and issued from stock exchanges, corporations, institutional investors, or associations (institutes) of directors and managers with the support of governments and international organizations. As a rule, compliance with these governance recommendations is not mandated by law, although the codes linked to stock exchange listing requirements may have a coercive effect. For example, companies quoted on the London and Toronto Stock Exchanges formally need not follow the recommendations of their respective national codes. However, they must disclose whether they follow the recommendations in those documents and, where not, they should provide explanations concerning divergent practices. Such disclosure requirements exert a significant pressure on listed companies for compliance. In contrast, the guidelines issued by associations of directors, corporate managers and individual companies tend to be wholly voluntary. For example, The GM Board Guidelines reflect the company’s efforts to improve its own governance capacity. Such documents, however, may have a wider multiplying effect prompting other companies to adopt similar documents and standards of best practice.

Corporate governance and firm performance

In its 'Global Investor Opinion Survey' of over 200 institutional investors first undertaken in 2000 and updated in 2002, McKinsey found that 80% of the respondents would pay a premium for well-governed companies. They defined a well-governed company as one that had mostly out-side directors, who had no management ties, undertook formal evaluation of its directors, and was responsive to investors' requests for information on governance issues. The size of the premium varied by market, from 11% for Canadian companies to around 40% for companies where the regulatory backdrop was least certain (those in Morocco, Egypt and Russia). Other studies have linked broad perceptions of the quality of companies to superior share price performance. In a study of five year cumulative returns of Fortune Magazine's survey of 'most admired firms', Antunovich et al found that those "most admired" had an average return of 125%, whilst the 'least admired' firms returned 80%. In a separate study Business Week enlisted institutional investors and 'experts' to assist in differentiating between boards with good and bad governance and found that companies with the highest rankings had the highest financial returns. On the other hand, research into the relationship between specific corporate governance controls and firm performance has been mixed and often weak. The following examples are illustrative.

Board composition

Some researchers have found support for the relationship between frequency of meetings and profitability. Others have found a negative relationship between the proportion of external directors and firm performance, while others found no relationship between external board membership and performance. In a recent paper Bagahat and Black found that companies with more independent boards do not perform better than other companies. It is unlikely that board composition has a direct impact on firm performance.

Remuneration

The results of previous research on the relationship between firm performance and executive compensation have failed to find consistent and significant relationships between executives' remuneration and firm performance. Low average levels of pay-performance alignment do not necessarily imply that this form of governance control is inefficient. Not all firms experience the same levels of agency conflict, and external and internal monitoring devices may be more effective for some than for others. Some researchers have found that the largest CEO performance incentives came from ownership of the firm's shares, while other researchers found that the relationship between share ownership and firm performance was dependent on the level of ownership. The results suggest that increases in ownership above 20% cause management to become more entrenched, and less interested in the welfare of their shareholders. Firm performance has been found to be positively associated with share option plans. These plans direct managers' energies and extend their decision horizons toward the long-term, rather than the short-term, performance of the company.

Attention to corporate governance

Corporate governance issues are receiving greater attention in both developed and developing countries as a result of the increasing recognition that a firm’s corporate governance affects both its economic performance and its ability to access long-term, low-cost investment capital. In response to calls by OECD ministers, a revised version of its "Principles of Corporate Governance" was produced in 2004. Numerous high-profile cases of corporate governance failure have focused the minds of governments, companies and the general public on the threat posed to the integrity of financial markets, although it is not clear that any system will or should prevent business failures, or that it is possible to provide a guarantee against fraud. Corporate Governance concerns have been widely studied. For the United States, an analysis of these concerns has been published by the New York Society of Securities Analysts in their 2003 Corporate Governance Handbook. What constitutes good and bad corporate governance is an on-going debate in politics, civil society, and academia. For an international survey of the scientific literature see [http://ssrn.com/abstract=343461 Becht, Bolton and Roell 2002]. The OECD publishes an annual paper on corporate governance. First issued in 1999, this paper has provided the framework for regional corporate governance roundtables in cooperation with the World Bank around the world. It has been endorsed as one of the Financial Stability Forum's 12 key standards, and form the basis for the World Bank's Review of Observance of Standards and Codes.

Foot notes

- [http://theyrule.net Theyrule.net]
- [http://www.oecd.org/dataoecd/32/18/31557724.pdf OECD Principles of Corporate Governance]

References

- Becht, Marco, Bolton, Patrick and Roell, Ailsa A., "Corporate Governance and Control" (October 2002). ECGI - Finance Working Paper No. 02/2002. [http://ssrn.com/abstract=343461 SSRN 343461]
- Brickley, James A., William S. Klug and Jerold L. Zimmerman, Managerial Economics & Organizational Architecture, ISBN 0072828099
- [http://en.wikipedia.org/wiki/Sir_Adrian_Cadbury Cadbury, Sir Adrian], "The Code of Best Practice", Report of the Committee on the Financial Aspects of Corporate Governance, Gee and Co Ltd, 1992.
- [http://en.wikipedia.org/wiki/Sir_Adrian_Cadbury Cadbury, Sir Adrian], "Corporate Governance : Brussels", Instituut voor Bestuurders, Brussels, 1996.
- [http://en.wikipedia.org/wiki/Thomas_Clarke Clarke, Thomas] (ed.) (2004) "Theories of Corporate Governance: The Philosophical Foundations of Corporate Governance," London and New York: Routledge, ISBN 041532307X
- [http://en.wikipedia.org/wiki/Thomas_Clarke Clarke, Thomas] (ed.) (2004) "Critical Perspectives on Business and Management: 5 Volume Series on Corporate Governance - Genesis, Anglo-American, European, Asian and Contemporary Corporate Governance" London and New York: Routledge, ISBN 0415329108
- Colley, J., Doyle, J., Logan, G., Stettinius, W., What is Corporate Governance ? (McGraw-Hill, December 2004) ISBN 0071444483
- [http://en.wikipedia.org/wiki/Frank_Easterbrook Easterbrook, Frank H.] and Daniel R. Fischel, The Economic Structure of Corporate Law, ISBN 0674235398
- Erturk, Ismail, Froud, Julie, Johal, Sukhdev and Williams, Karel (2004) Corporate Governance and Disappointment Review of International Political Economy, 11 (4): 677-713.
- Monks, Robert A.G. and Minow, Nell, Corporate Governance (Blackwell 2004) ISBN 1405116986
- Monks, Robert A.G. and Minow, Nell, Power and Accountability (HarperBusiness 1991), full text available [http://www.thecorporatelibrary.com/power/contents.html online]
- New York Society of Securities Analysts, 2003, Corporate Governance Handbook, [http://www.nyssa.org/Template.cfm?Section=corp_gov_com&Template=/TaggedPage/TaggedPageDisplay.cfm&TPLID=3&ContentID=499]
- [http://en.wikipedia.org/wiki/OECD OECD] (1999, 2004) Principles of Corporate Governance Paris: OECD
- Whittington, G. "Corporate Governance and the Regulation of Financial Reporting", Accounting and Business Research, Vol. 2, 1993, Corporate Governance Special Issue, pp. 311-319.

External sources

- [http://www.corpgov.net/ Corporate Governance (corpgov.net)], with various [http://www.corpgov.net/library/definitions.html definitions] of corporate governance
- [http://www.corpgov.hbs.edu Corporate Governance Initiative] at the Harvard Business School
- [http://www.thecorporatelibrary.com Corporate Library]
- [http://www.ecgi.org European Corporate Governance Institute], an international scientific not-for-profit association
- ECGI [http://www.ecgi.org/codes corporate governance codes, principles and recommendations]
- [http://www.oceg.org Open Compliance and Ethics Group], a not-for-profit organisation
- [http://www.ssrn.com/ Social Science Research Network (SSRN)] - related papers
- [http://www.ccg.uts.edu.au UTS Centre for Corporate Governance] at the University of Technology, Sydney, Australia
- [http://rru.worldbank.org/PapersLinks/Corporate-Governance-Policy/ World Bank Policy on Corporate Governance.]
- [http://www.zicklincenter.org Zicklin Center for Business Ethics Research] at the Wharton School of the University of Pennsylvania Category:Corporations law Category:Management Category:Corporate governance ja:コーポレートガバナンス

European Union

: This article is about the European Union. For other meanings of 'EU', see the EU (disambiguation) page. The European Union or the EU is an intergovernmental and supranational union of 25 European countries, known as member states. It will include another 2 countries in 2007 - Romania and Bulgaria. The European Union was established under that name in 1992 by the Treaty on European Union (the Maastricht Treaty). However, many aspects of the Union existed before that date through a series of predecessor relationships, dating back to 1951. The European Union's activities cover all areas of public policy, from health and economic policy to foreign affairs and defence. However, the extent of its powers differs greatly between areas. Depending on the area in question, the EU may therefore resemble:
- a federation (for example, on monetary affairs, agricultural, trade and environmental policy)
- a confederation (for example, on social and economic policy, consumer protection, home affairs)
- an international organisation (for example, in foreign affairs) A key activity of the EU is the establishment and administration of a common single market, consisting of a customs union, a single currency (adopted by 12 of the 25 member states), a Common Agricultural Policy, a common trade policy, and a Common Fisheries Policy. The most important EU institutions are the Council of the European Union, the European Commission, the European Parliament and the European Court of Justice.

Status

The members of the European Union have transferred to it considerable sovereignty, more than that of any other non-sovereign regional organisation. As has been mentioned, in certain areas the EU begins to take on the character of a federation or confederation. However, in legal terms, member states remain the masters of the Treaties, which means that the Union does not have the power to transfer additional powers from states onto itself without their agreement through further international treaties. Further, in many areas member states have given up relatively little national sovereignty, particularly in key areas of national interest such as foreign relations and defence. This unique structure means the European Union is perhaps best seen as a sui generis entity. On 29 October, 2004, European heads of government and state signed the Treaty establishing a Constitution for Europe. This has been ratified by some member states and is currently awaiting ratification by the other states. However, this process faltered on May 29, 2005 when the majority of French voters rejected the constitution in a referendum by 54.7%. The French rejection was followed three days later by a Dutch one on June 1 when in the Netherlands 61.6% of voters refused the constitution as well. The current and future status of the European Union therefore continues to be subject of political controversy, with widely differing views both within and between member states. For example, in the United Kingdom, currently holding the EU presidency, one poll suggested that around 75% of the population are indifferent or opposed to the European Union. However, other countries are more in favour of European integration — soon after the Netherlands and the French voted "no" on the constitution, Luxembourg voted "yes."

Current issues

Major issues currently facing the European Union cover its membership, structure, procedures and policies; they include the adoption, abandonment or adjustment of the new constitutional treaty, the Union's enlargement to the south and east (see below), resolving the Union's problematic fiscal and democratic accountability, revision of the rules of the Stability and Growth Pact, and the future budget and the Common Agricultural Policy. At the next Intergovernmental Conference (IGC), which is a semi-annual meeting of EU member states' heads of state and government, EU member states must decide on how it will allocate the EU budget. Also, here is the issue of the "Financial Perspective", which is renegotiated every seven years. The next Financial Perspective will be for 2007-2013. Issues that will be controversial during upcoming budget debates will be the British rebate, France's benefits from the Common Agricultural Policy, Germany and the Netherlands' large contributions to the EU budget, and reform of the European Regional Development Funds. Many commentators have envisaged these debates to yield a major split between governments such as France and Germany, who call for a broader budget and a more federal union, and governments such as that of the UK, who demand a slimmer budget with more funding transferred to science and research (and whose watchword is modernisation). Turkey on 4 October 2005 furthered its will to enter the European Union, making them the first predominantly Muslim country to open membership talks with the organisation. Many states within the union are wary of this decision, chiefly Austria. Austrian apprehension for Turkey dates back for centuries, leading from the 1683 Battle of Vienna, where the Austrians defeated the Ottoman Turks. Fears of an influx of migration from Turkey into Austria if the country and its 70 million inhabitants are allowed into the union is a heated topic. Others argue that most of the country is on the wrong side of the Bosporus Strait, which many believe to be the dividing line between Europe and Asia. Turkey also refuses to acknowledge any relations with the state of Cyprus since Turkish troops invaded the northern section of the island in 1974 following a coup attempt by Greek ultra-nationalists. Austria has proposed for an esteemed partnership for Turkey which would come short of an actual membership. Turkey rejected that proposal. Other European states claim that denying Turkey to a membership would brew future hostilities with other Muslim nations.

Origins and history

1974 Attempts to unite the disparate nations of Europe precede the modern nation states; they have occurred repeatedly throughout the history of Europe. Three thousand years ago, Europe was dominated by the Celts, and then conquered and ruled by the Mediterranean centred Roman Empire. These early unions were created by force. The Frankish empire of Charlemagne and the Holy Roman Empire united large areas under a loose administration for hundreds of years. More recently the 1800s customs union under Napoleon and the 1940s conquests of Nazi Germany had only transitory existence. Given Europe's collections of languages and cultures, these attempts usually involved military subjugation of unwilling nations, leading to instability, others have lasted thousands of years and large spells of peace and economical and technological progress as in the Roman Empire's Pax Romana. One of the first proposals for peaceful unification through cooperation and equality of membership was made by the pacifist Victor Hugo in 1851. Following the catastrophes of the First World War and the Second World War, the impetus for the founding of (what was later to become) the European Union greatly increased, driven by the determination to rebuild Europe and to eliminate the possibility of another war. This sentiment eventually led to the formation of the European Coal and Steel Community by (West) Germany, France, Italy and the Benelux countries. This was accomplished by the Treaty of Paris, signed in April, 1951, and taking effect in July, 1952. The first full customs union was originally known as the European Economic Community (informally called the Common Market in the UK), established by the Treaty of Rome in 1957 and implemented on 1 January 1958. This later changed to the European Community which is now the "first pillar" of the European Union. The EU has evolved from a trade body into an economic and political partnership. For more details, please see History of the European Union. As president of the Convention on the Future of Europe, the former French president Valéry Giscard d'Estaing proposed to change the name of the European Union to United Europe but it was not adopted.

Member states and enlargement

The European Union has 25 member states, an area of 3,892,685 km² and approximately 460 million EU citizens as of December 2004. If it were a country, it would be the seventh largest in the world by area and the third largest by population after China and India. The European Union has land borders with 20 nations and sea borders with 31. India Since its inception with six countries, nineteen further states have joined in successive waves of enlargement: Note:
- Greenland, which was granted home rule by Denmark in 1979, left the European Community in 1985, following a referendum.
- Romania and Bulgaria will join EU on 1 January 2007

Overseas territories

Several overseas territories and dependencies have close associations with particular EU member states, for example Greenland, the Isle of Man, the Azores and Madeira.

Future enlargement and close relationships

- Romania and Bulgaria are scheduled to become members on 1 January 2007, provided that they meet the conditions for membership and that the Treaty of Accession for the Republic of Bulgaria and Romania is ratified by parliaments of member states. The treaty was signed by representatives of the EU Member States at the Abbaye de Neumünster in Luxembourg on 25 April 2005. As of 2005, member state parliaments are taking forward its ratification.
- Turkey is an official candidate to join the European Union. Turkish European ambitions date back to 1963 Ankara Agreements. Turkey started preliminary negotiations on 3 October 2005. However, analysts believe 2015 is the earliest date the country can join the union due to the plethora of economic and social reforms it has to complete. Since it has been granted official candidate status, Turkey has implemented permanent policies on human rights, abolished the death penalty, granted cultural rights to its large Kurdish minority, and taken positive steps to solve the Cyprus question. However, due to its religious and cultural differences, Turkey faces strong opposition from conservative and religious governments of the member states, mainly France, Germany, Austria, Greece, Cyprus and Slovenia.
- Croatia is another official candidate country to join. It is expected to join by 2010, although the accession process could still be hampered by issues with the UN War Crimes Tribunal in The Hague among other things. See also: Croatian accession to the European Union.
- On 9 November 2005, the European Commission recommended granting candidate status to Macedonia [http://news.bbc.co.uk/1/hi/world/europe/4420158.stm].
- The EFTA states of Iceland, Liechtenstein and Norway are members of the European Economic Area which allows them to participate in most aspects of the EU single market without joining the EU. Switzerland, the fourth EFTA state, rejected EEA membership in a referendum; however, it has established close ties to the EU by means of bilateral treaties.

Context – rationale for enlargement and future prospects

Supporters of the European Union argue that the growth of the EU is a force for peace and democracy. They argue that the wars which were a periodic feature of the history of Western Europe have ceased since the formation of the European Economic Community (which later became the EU) in the 1950s. They also claim that in the early 1970s, Greece, Portugal and Spain were all dictatorships, but the desire of the business communities in these three countries to be in the EU created a strong impetus for democracy there. Others argue that peace in Europe since World War II is more due to other causes, such as the need for a unified response to the threat from the Soviet Union, a need for reconstruction after World War II, and a collective temporary tiring of waging war, and that the dictatorships cited came to an end for totally different reasons. In more recent times, the European Union has been extending its influence to the east. It has accepted several new members that were previously behind the Iron Curtain, and has plans to accept several more in the medium-term. It is hoped that in a similar fashion to the entry of Spain, Portugal and Greece in the 1980s, membership for these states will help cement economic and political stability. Further eastward expansion also has long-term economic benefits, but the remaining European countries are not viewed as currently suitable for membership, especially the troubled economies of countries further east. It is hoped by some that eventual membership of states that are currently politically unstable might help deal with tensions resulting from earlier conflicts such as the Yugoslav wars and the Cyprus dispute, and help avoid such conflict in the future. As the EU continues to enlarge eastward, the candidate countries' accessions tend to grow more controversial. As discussed, the EU has finished accession talks with Bulgaria and Romania, and set an entry date for the two countries in 2007. However, the rejection of the EU Constitution by France and the Netherlands, and the EU's slow economic growth, have cast some doubt on whether the EU will be ready to accept new members in 2007, despite the fact that both Bulgaria and Romania have signed Accession Treaties to join in 2007. A further point of contention for EU members is the accession of Turkey. Accession preliminary talks between Turkey and the EU are due to begin in early October 2005. Turkey's Government, led by Prime Minister Recep Tayyip Erdogan, has enacted many legal reforms to meet the EU's entry requirements. However, some member states, especially Austria [http://euobserver.com/9/19989] repudiate Turkey joining the EU, and the possible economic, immigration and cultural implications that may bring.

Institutions and legal framework

EU institutions

The functioning of the European Union is supported by several institutions:
- The European Parliament (732 members 750 max.)
- The Council of the European Union (or 'Council of Ministers') (25 members)
- The European Commission (25 members)
- The European Court of Justice (incorporating the Court of First Instance) (25 judges (& 25 judges of CFI))
- The European Court of Auditors (25 members)
- The European Council (25 members) - whose unique role is perhaps better described as that of a "quasi-institution" There are several financial bodies:
- European Central Bank (which alongside the national Central Banks, composes the European System of Central Banks)
- European Investment Bank (including the European Investment Fund) There are also several advisory committees to the institutions:
- Committee of the Regions, advising on regional issues
- Economic and Social Committee, advising on economic and social policy (principally relations between workers and employers)
- Political and Security Committee, established in the context of the Common Foreign and Security Policy, monitoring and advising on international issues of global security. There are also a great number of bodies, usually set up by secondary legislation, which exist to implement particular policies. These are the agencies of the European Union. Examples are the European Environment Agency, the European Aviation Safety Agency and the Office for Harmonisation in the Internal Market. Lastly, the European Ombudsman investigates complaints of maladministration by EU institutions.

Location of EU institutions

The EU has no official capital and its institutions are divided between several cities:
- Brussels, Belgium - Considered the de facto capital of the EU
- Seat of the European Commission and the Council of the European Union
- Venue for the European Parliament's committee meetings and mini-sessions
- Host city for all European Council summits (since 2004)
- Strasbourg, France
- Seat of the European Parliament and venue of its twelve week-long plenary sessions each year
- Also the location of two key European organisations — the Council of Europe and the European Court of Human Rights — which are different from the EU and have a wider membership than the EU
- Luxembourg City, Luxembourg
- Seat of the European Court of Justice and the Secretariat of the European Parliament
- Seat of the European Investment Bank
- Frankfurt, Germany
- Seat of the European Central Bank
- The Hague, The Netherlands
- Seat of EUROPOL (the European Police Office)

Legal framework

EUROPOL] European Union law comprises a large number of overlapping legal and institutional structures. This is a result of its being defined by successive international treaties, with each new treaty amending and supplementing earlier ones.. In recent years, considerable efforts have been made to consolidate and simplify the treaties, culminating with the final draft of the Treaty establishing a Constitution for Europe. If this proposed treaty is adopted, it will replace the set of overlapping treaties that form the current constitution of the EU with a single text. The earliest EU treaty was the Treaty of Paris of 1951 (took effect in 1952) which established the European Coal and Steel Community between an original group of six European countries. This treaty has since expired, its functions taken up by subsequent treaties. On the other hand, the Treaty of Rome of 1957 is still in effect, though much amended since then, most notably by the Maastricht treaty of 1992, which first established the European Union under that name. The most recent amendments to the Treaty of Rome were agreed as part of the Treaty of Accession of the 10 new member states, which entered into force on 1 May 2004. The EU member states have recently agreed to the text of a new constitutional treaty that, if ratified by the member states, would become the first official constitution of the EU, replacing all previous treaties with a single document. Although accepted by many countries, this document was rejected in a French referendum with a 55% majority on May 29th and in the Dutch referendum with a 62% majority on June 1st. If the Constitutional Treaty fails to be ratified by all member states, then it might be necessary to reopen negotiations on it. Most politicians and officials agree that the current pre-Constitution structures are inefficient in the medium term for a union of 25 (and growing) member states. Senior politicians in some member states (notably France) have suggested that if only a few countries fail to ratify the Treaty, then the rest of the Union should proceed without them, possibly creating an "Avant Garde" or Inner Union of more committed member states to proceed with "an ever-deeper, ever-wider union".

The role of the European Community within the Union

European Communities: European Community plus Euratom The term European Communities refers collectively to two entities -- the European Economic Community (now called the European Community) and the European Atomic Energy Community (also known as Euratom) -- each founded pursuant to a separate treaty in the 1950s. A third entity, the European Coal and Steel Community, was also part of the European Communities, but ceased to exist in 2003 upon the expiration of its founding treaty. Since 1967, the European Communities have shared common institutions, specifically the Council, the European Parliament, the Commission and the Court of Justice. In 1992, the European Economic Community, which of the three original communities had the broadest scope, was renamed the "European Community" by the Treaty of Maastricht. European Union: European Communities plus CFSP and PJCC The European Communities are one of the three pillars of the European Union, being both the most important pillar and the only one to operate primarily through supranational institutions. The other two "pillars" – Common Foreign and Security Policy, and Police and Judicial Co-operation in Criminal Matters – are looser intergovernmental groupings. Confusingly, these latter two concepts are increasingly administered by the Community (as they are built up from mere concepts to actual practice). Effect of Constitutional Treaty If it is ratified, the proposed new Treaty establishing a Constitution for Europe would abolish the three-pillar structure and, with it, the distinction between the European Union and the European Community, bringing all the Community's activities under the auspices of the European Union and transferring the Community's legal personality to the Union. There is, however, one qualification: it appears that Euratom would remain a distinct entity governed by a separate treaty.

Intergovernmentalism and supranationalism

A basic tension exists within the European Union between intergovernmentalism and supranationalism. Intergovernmentalism is a method of decision-making in international organisations where power is possessed by the member states and decisions are made by unanimity. Independent appointees of the governments or elected representatives have solely advisory or implementational functions. Intergovernmentalism is used by most international organisations today. An alternative method of decision-making in international organisations is supranationalism. In supranationalism power is held by independent appointed officials or by representatives elected by the legislatures or people of the member states. Member state governments still have power, but they must share this power with other actors. Furthermore, decisions are made by majority votes, hence it is possible for a member-state to be forced by the other member-states to implement a decision against its will. Some forces in European Union politics favour the intergovernmental approach, while others favour the supranational path. Supporters of supranationalism argue that it allows integration to proceed at a faster pace than would otherwise be possible. Where decisions must be made by governments acting unanimously, decisions can take years to make, if they are ever made. Supporters of intergovernmentalism argue that supra-nationalism is a threat to national sovereignty, and to democracy, claiming that only national governments can possess the necessary democratic legitimacy. Intergovernmentalism is being favoured by more Eurosceptic nations such as the United Kingdom, Denmark and Sweden; while more integrationist nations such as the Benelux countries, France, Germany, and Italy have tended to prefer the supranational approach. The European Union attempts to strike a balance between the two approaches. This balance however is complex, resulting in the often labyrinthine complexity of its decision-making procedures. Starting in March 2002, a Convention on the Future of Europe again looked at this balance, among other things, and proposed changes. These changes were discussed at an Intergovernmental Conference (IGC) in May 2004 and led to the Constitutional Treaty discussed above. Supranationalism is closely related to the inter-governmentalist vs. neofunctionalist debate. This is a debate concerning why the process of integration has taken place at all. Intergovernmentalists argue that the process of EU integration is a result of tough bargaining between states. Neofunctionalism, on the other hand, argues that the supranational institutions themselves have been a driving force behind integration. For further information on this see the page on Neofunctionalism.

Main policies

As the changing name of the European Union (from European Economic Community to European Community to European Union) suggests, it has evolved over time from a primarily economic union to an increasingly political one. This trend is highlighted by the increasing number of policy areas that fall within EU competence: political power has tended to shift upwards from the member states to the EU. This picture of increasing centralisation is counter-balanced by two points. First, some member states have a domestic tradition of strong regional government. This has led to an increased focus on regional policy and the European regions. A Committee of the Regions was established as part of the Treaty of Maastricht. Second, EU policy areas cover a number of different forms of co-operation.
- Autonomous decision making: member states have granted the European Commission power to issue decisions in certain areas such as competition law, State Aid control and liberalisation.
- Harmonisation: member state laws are harmonised through the EU legislative process, which involves the European Commission, European Parliament and Council of the European Union. As a result of this European Union Law is increasingly present in the systems of the member states.
- Co-operation: member states, meeting as the Council of the European Union agree to co-operate and co-ordinate their domestic policies. The tension between EU and national (or sub-national) competence is an enduring one in the development of the European Union. (See also Inter-governmentalism vs. Supra-nationalism (above), Euroscepticism.) All prospective members must enact legislation in order to bring them into line with the common European legal framework, known as the Acquis Communautaire. (See also European Free Trade Association (EFTA), European Economic Area (EEA) and Single European Sky.) See table of states participating in some of the initiatives.

Single market

Many of the policies of the EU relate in one way or another to the development and maintenance of an effective single market. Significant efforts have been made to create harmonised standards – which are designed to bring economic benefits through creating larger, more efficient markets. The power of the single market reaches beyond the EU borders, because to sell within the EU, it is beneficial to conform to its standards. Once a non-member country's factories, farmers and merchants conform to EU standards, much of the cost of joining the union has already been sunk. At that point, harmonising domestic laws in order to become a full member is relatively painless, and may create more wealth through eliminating the customs costs. The single market has both internal and external aspects:

Internal policies

single market
- Free trade of goods and services among member states (an aim further extended to three of the four EFTA states by the European Economic Area, EEA)
- A common EU competition law controlling anti-competitive activities of companies (through antitrust law and merger control) and member states (through the State Aids regime).
- The Schengen treaty allowed removal of internal border controls and harmonisation of external controls between its member states. This excludes the UK and Ireland, which have derogations, but includes the non-EU members Iceland and Norway. Switzerland also voted via referendum in 2005 to become part of the Schengen zone.
- Freedom for citizens of its member states to live and work anywhere within the EU, provided they can support themselves (also extended to the other EEA states).
- Free movement of capital between member states (and other EEA states).
- Harmonisation of government regulations, corporations law and trademark registrations.
- A single currency, the Euro (excluding the UK, and Denmark, which have derogations). Sweden, although not having a specific opt-out clause, has not joined the ERM II, voluntarily excluding itself from the monetary union.
- A large amount of environmental policy co-ordination throughout the Union.
- A Common Agricultural Policy and a Common Fisheries Policy.
- Common system of indirect taxation, the VAT, as well as common customs duties and excises on various products.
- Funding for the development of disadvantaged regions (structural and cohesion funds).

External policies

- A common external customs tariff, and a common position in international trade negotiations.
- Funding for programmes in candidate countries and other Eastern European countries, as well as aid to many developing countries, through its Phare and Tacis programmes.
- The establishment of a single market European Energy Community by means of the Energy Community South East Europe Treaty.

Co-operation and harmonisation in other areas

- Freedom for citizens of the EU to vote in local government and European Parliament elections in any member state.
- Co-operation in criminal matters, including sharing of intelligence (through EUROPOL and the Schengen Information System), agreement on common definition of criminal offences and expedited extradition procedures.
- A common foreign policy as a future objective, however this has some way to go before being realised. The divisions between the member states (in the letter of eight) and then-future members (in the Vilnius letter) during the run up to the 2003 invasion of Iraq highlights just how far off this objective could be before it becomes a reality.
- A common security policy as an objective, including the creation of a 60,000-member European Rapid Reaction Force for peacekeeping purposes, an EU military staff and an EU satellite centre (for intelligence purposes).
- Common policy on asylum and immigration.
- Common funding of research and technological development, through four-year Framework Programmes for Research and Technological Development. The Sixth Framework Programme is running from 2002 to 2006.

Economy

Sixth Framework Programme If considered a single unit, the European Union has the largest economy in the world with a 2004 GDP of 11,723,816 PPPs. The EU economy is expected to grow further over the next decade as more countries join the union - especially considering that the new States are usually poorer than the EU average, and hence the expected fast GDP growth will help achieve the dynamic of the united Europe. However, It is estimated that the Eurozone will only grow around 0.3 per cent (Q2 2005) [http://www.eubusiness.com/Finance/050831114912.e6x23dfu 1], while other industrialised nations such as the United States is estimated to grow three times as much at around 3.2%(Q2 2005).The European Council published on 17 November 2005 that the economy of the European Union will grow approximately 1.5% in 2005. The eurozone however, will grow 1.3% in 2005. The Council is hopeful that the European Union will grow further in 2006 and in 2007 (2.1% 2006 2.4% 2007). Germany, the most important country for the EU will grow about: 0.8% 2005, 1.2% 2006 and 1.6% 2007. After a extremely slow growth, it seems that the EU will grow again the next couple of years. [http://www.neatideas.com/gdp.htm 2]

Standard of living

Below is a table and three graphs showing, respectively, the GDP (PPP), the GDP (PPP) per capita and the GDP (nominal) per capita for the European Union and for each of its 25 member states. This can be used as a rough gauge to the relative standards of living among member states. The two future members Bulgaria and Romania (set for 1 January, 2007) are also included in the table. The data set is for the year 2005 and graphs are for the year 2004. All 2005 data are projections. Source: CIA World Factbook [http://www.cia.gov/cia/publications/factbook/geos/ee.html]
All other figures, source: IMF web site ([http://www.imf.org/external/pubs/ft/weo/2005/02/data/dbcoutm.cfm?SD=2005&ED=2005&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=941-946-137-122-181-124-138-964-182-423-935-128-936-961-939-184-172-132-134-174-144-944-178-136-112&S=PPPWGT&CMP=0&x=80&y=8 2005 GDP PPP], [http://www.imf.org/external/pubs/ft/weo/2005/02/data/dbcoutm.cfm?SD=2005&ED=2005&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=941-946-137-122-181-124-138-964-182-423-935-128-936-961-939-184-172-132-134-174-144-944-178-136-112&S=PPPPC&CMP=0&x=31&y=6 2005 per capita GDP PPP], [http://www.imf.org/external/pubs/ft/weo/2005/02/data/dbcoutm.cfm?SD=2005&ED=2005&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=941-946-137-122-181-124-138-918-964-182-968-423-935-128-936-961-939-184-172-132-134-174-144-944-178-136-112&S=NGDPDPC&CMP=0&x=41&y=14 2005 per capita GDP, current prices]).

Comparison with other blocs/countries

During 2003. Cyan for largest value, green for smallest, among the blocs compared.
Source: CIA World Factbook 2004, IMF WEO Database
¹ Member of NAFTA

Partial bibliography

- Europe Recast: A History of European Union by Desmond Dinan (Palgrave Macmillan, 2004) ISBN 0333987349
- The Great Deception: The Secret History of the European Union by Christopher Booker, Richard North (Continuum International Publishing Group - Academi, 2003) ISBN 0826471056
- Understanding the European Union 2nd ed by John McCormick (Palgrave Macmillan, 2002) ISBN 033394867X
- The Institutions of the European Union edited by John Peterson, Michael Shackleton (Oxford University Press, 2002) ISBN 0198700520
- The Government and Politics of the European Union by Neill Nugent (Palgrave Macmillan, 2002) ISBN 0333984617
- The European Union: A Very Short Introduction by John Pinder (Oxford, 2001) ISBN
- The United States of Europe: The New Superpower and the end of American Supremacy by T.R. Reid (Penguin Press, 2004) ISBN 1594200335
- This Blessed Plot: Britain and Europe from Churchill to Blair by Hugo Young (Macmillan, 1998) ISBN 0333579925
- The European Dream: How Europe's Vision of the Future Is Quietly Eclipsing the American Dream by Jeremy Rifkin (Jeremy P. Tarcher, 2004) ISBN 1585423459

External links and references

[http://www.europa.eu/ The European Union On-Line]

Official EU website, europa.eu, in the official languages. Some subpages:
- [http://www.europa.eu/comm/mediatheque/multimedia/select/maps_en.html European Commission - Maps of Europe]
- [http://www.europa.eu/comm/mediatheque/audio/index_en.html Press conferences and speech audio] (MP3 and RealAudio).
- [http://www.europa.eu/eur-lex/en/index.html EUR-LEX - EU law and proposed legislation]
- [http://www.europa.eu/en/record/green/gp9611/index.htm Green Paper on a numbering policy for telecommunications (+3 country call code proposal)]
- [http://www.europa.eu/comm/external_relations/china/intro/ EU Policy on China]

Other sites

-
- [http://www.democracyineurope.com Democracy in Europe]
- [http://news.bbc.co.uk/1/hi/in_depth/europe/2003/inside_europe/ BBC News: Inside Europe] guide to the changing face of the EU
- [http://www.cafebabel.com/ café babel] European current affaires online magazine, published in six languages
- [http://www.zei.de/zei_startseite_neu/startseite_e.htm Center for European Integration Studies] (ZEI) - Research Institute focusing on the EU
- [http://www.cia.gov/cia/publications/factbook/geos/ee.html CIA World Factbook entry]
- [http://www.dadalos-europe.org/ Dadalos, International UNESCO Education Server for Civic, Peace and Human Rights Education: Basic Course on the EU]
- [http://www.timbro.com/euvsusa/ EU versus USA] - Study comparing GDP and growth (available in PDF)
- [http://www.eurunion.org/ EU in the USA] - EU delegation to the US
- [http://eunews.euroesprit.org/ EU News] - European Union News
- [http://www.europeanlawmonitor.com/ European Law Monitor] - Monitors and tracks EU proposals
- [http://www.europeanvoice.com European Voice] - Independent Weekly Newspaper on EU Affairs
- [http://www.EUobserver.com/ EU Observer] - News website focusing on the EU
- [http://www.eufpc.org/ EUFPC European Foreign Policy Council] - Interdisciplinary Think-tank and Network
- [http://www.euractiv.com/ EurActiv.com] Independent media portal dedicated to EU affairs
- [http://www.euronews.net/ Euronews] - Multilingual public TV news channel run by ITN
- [http://www.guardian.co.uk/eu/ Guardian Unlimited Special Report: European Union] guide and ongoing news
- [http://search.looksmart.com/p/browse/us1/us317836/us552286/us554374/us526499/us526505/us531057/ LookSmart - European Union] directory category
- [http://www.mapsofworld.com/world-eumember-map.htm Mapsofworld.com] - World Map of European Union Countries
- [http://www.oecd.org/eu OECD's EU country page] and [http://www.oecd.org/eco/surveys/eu OECD's Economic Survey of the EU]
- [http://dmoz.org/Society/Government/Multilateral/Regional/European_Union/ Open Directory Project - European Union] directory category
- [http://europeansociety.tripod.com/ S.C. European Society - Oxford University (1950s)] World's oldest?
- [http://dir.yahoo.com/Regional/Regions/Europe/Government/European_Union__EU_/ Yahoo - European Union] directory category

European Union history

- [http://www.eu-history.leidenuniv.nl/index.php3?m=10&c=52 The Messina Declaration 1955 final document of The Conference of Messina 1 to 3 June 1955 - birth of the European Union]
- [http://www.ena.lu European Navigator] - Thousands of multimedia documents on the history of Europe

Chairman

As a Role

As a Position

Other uses

Meeting

Topics in meetings

Types of meeting

Meeting styles

Seven rules for meetings

See also

External links

Organization

Pyramids or hierarchies

Committees or juries

Staff organisation or cross-functional team

Matrix organisation

Ecologies

"Chaordic" organisations

See also

Related lists

References

External links

Committee

Deliberative body

See also

Agenda

Rules of order

Common Parliamentary Authorities

See also

External links

Chairman of the board

Corporate governance

Definition

History

Parties to corporate governance

Principles

Mechanisms and controls

Internal corporate governance controls

External corporate governance controls

Systemic problems of corporate governance

Role of the accountant

Regulation

Self-regulation

Rules versus principles

Enforcement

Corporate governance models around the world

Codes and guidelines

Corporate governance and firm performance

Board composition

Remuneration

Attention to corporate governance

Foot notes

References

See also

External sources

European Union

Status

Current issues

Origins and history

Member states and enlargement

Overseas territories

Future enlargement and close relationships

Context – rationale for enlargement and future prospects

Institutions and legal framework

EU institutions

Location of EU institutions

Legal framework

The role of the European Community within the Union

Intergovernmentalism and supranationalism

Main policies

Single market

Internal policies

External policies

Co-operation and harmonisation in other areas

Economy

Standard of living

Comparison with other blocs/countries

See also

Lists

Other