Noah denkt™  -
    Project for Philosophical Evaluations of the Economy
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Good corporate governance cannot be codified
An opinion about Jamie Dimon’s and Uli Hoeness’ public relation dilemma, first drafted on May 13, published on
May 15, 2013
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Our international readers may not know about this: But Germany´s most successful and most celebrated sports
manager, Bayern Munich boss Uli Hoeness, is in dire straits these days. After admitting that he operated a secret,
non-Club-related bank account in Switzerland he is now facing tax evasion charges that might force him to do time
in jail. Obviously, Mr. Hoeness’ predicament sparked a debate as to whether corporate governance rules would
dictate that he leave his position as president of the club in order to dissipate all suspicion of corruption that might
tarnish the image of Bayern Munich and its corporate sponsors. Mr. Hoeness’ case is at this point still pending
and no court judgment has been handed down to him so far.

At the same time, another case in the US is causing a similar debate about the good and bad of standardized
corporate governance rules. This time the controversy centers around the unwillingness of JPMorgan’s Jamie
Dimon to give up his dual leadership position as CEO and Chairman of the Board. Critics of his dual mandate
allege that Mr. Dimon’s reach inside the bank is way too influential for the supervisory board to still be able to its
job adequately. To support their view the proponents of a split-up usually point to
JPMorgan’ multi-billion dollar
loss on derivate trades which was happening right under Mr. Dimon’s nose. The argument is that the “London
Whale” incident demonstrates that Mr. Dimon is too distracted by his dual responsibilities that he could still do his
managerial job well enough.

Now, obviously there is an opposing view to all of this. And to find out what critics of an overly rigid application of
corporate governance rules have to say you should listen to Ken Langone, an investment banker and co-founder
of HomeDepot. Because Mr. Langone has some passionate views about this. After all, he argues that Mr. Dimon’s
stewardship of JPMorgan has been next to flawless, that companies are better served by a strong unified
leadership and that the independence of a board has more to do with the quality of the people who sit on it than
with the rigidity in which codified rules are being applied therein. In fact, Mr. Langone would go a step further and
submit that strong corporate governance might just as well lead to the complete demise of the company. “Take
the example of Kodak”, he would say, “Kodak had great corporate governance. And look where the company is
today....”
(see Footnote*)

Granted, Noah denkt™’s views on the topic are somewhat less experienced than those of Mr. Langone. We do
feel however that the general idea to codify and standardize the notion of good corporate governance is beside
the point. After all, it cannot be denied that questions of honesty and moral rectitude can best be judged on a
case by case basis . And hence, it is only natural that the most eminent of moral philosophers never dreamt about
laying down multi-page manuals of good conduct but opted for the propagation of a general, rule-of-thumb-
orientation instead**. – No, in our mind it is clear that the integrity of a company is better served by the
documented and communicated circumspection and clarity of its leaders than by the iron-clad approach of a
standardized value set. And we must therefore agree with Mr. Lagone when he infers that the moral quality of an
entrepreneurial vision should preferably be evaluated by other entrepreneurial minds.*

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Footnote*: Our recount of Mr. Langone’s views is based on an interview which he gave to Bloomberg TV (“In the Loop” with Betty Liu)
on May 13, 2013. Our apologies to him if we shouldn’t have echoed and summarized his position well enough.

Footnote**: How about
the Golden Rule as a general guideline for individual behavior? Granted, it is abstract and warrants a
continuous reflection and self-explanation. But wouldn’t that serve our ethical purpose more than the current legalistic approach?
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Keywords:


corporate governance rules, pro and con of corporate government rules, entrepreneurial
view of corporate governance rules, critics of corporate government rules, corporate
governance and moral rectitude of companies, integrity of company leadership