Standard bearer

As you may have spotted, we’ve been writing quite a lot about an emerging UK debate over the future of governance. London Stock Exchange chief executive Julia Hoggett and leaders at the Capital Markets Industry Taskforce argue it’s become a burden, while others claim the UK is falling behind, particularly on audit reform.

Now we have another instalment in the great governance debate. Naureen Zahid, investor relations director at OpenOcean, a venture capital fund, writes in CityAM: “…if London wishes to remain a premier global financial centre, it must evolve to support the changing needs of businesses seeking to go public.

“However, relaxing standards around working capital, financial reporting and other governance safeguards risks unintended consequences.”

She reminds City folk that “the solution” to its future “lies in balancing democratised investment with responsible oversight”.

Meanwhile, the UK awaits government action to create the new reporting regulator it has long promised. Put the kettle on; could be a long wait.

False accounting?

It is perhaps one of the strangest governance debacles of the modern age: the departure of Post Office chair Henry Staunton after a disagreement with business secretary Kemi Badenoch.

Staunton alleged in a Sunday Times article that he was asked in January last year to “slow” compensation payments to former sub-postmasters, after around 900 of them were wrongfully accused of false accounting or theft. Staunton was not chair at the time of mistreatment of sub-postmasters.

This week, Badenoch has published a letter from the permanent secretary Sarah Munby denying she made any proposal that compensation be delayed. She insists her conversation with the Post Office chair was about “operational funding” and there is a civil service note of the chat to prove it.

Staunton has his own note. Two notes, quite the disagreement. Either way, sub-postmasters would have taken little confidence from the clash, just when they need to hear the people in charge are in control.

Standing innovation

How do companies respond when they suffer reputational damage? Business academics based at INSEAD think they know. Research shows that firms invest to “repair” the damage and begin talking about “reputation” much more with investors.

But they might also spend more on corporate social responsibility activities. Those with government contracts will spend more on political donations.

The bad news is that companies only spend more on higher wages for employees after a data breach reveals their employment records.

“Collectively, these results suggest that firms rationally target their responses to repair reputations to prioritise particularly important stakeholders or events.” Good. We wouldn’t want companies to raise pay for irrational reasons, like it’s a good idea to pay people well.