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The IUP Journal of Corporate Governance :
Board Characteristics that Promote Effective Governance: A Perspective on Trinidad and Tobago and Jamaica
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The term `Corporate Governance' (CG) has been used flexibly and in a variety of contexts to describe various aspects of corporate accountability. This is not surprising, given the history of corporate development and the rise of the professional salaried manager as a new subspecies of the economic man. This paper begins by considering CG and its history, which is followed by a brief examination of the nature of boards and then a full discussion on the board characteristics which promote effective governance, using examples to illustrate key points. This short paper attempts to build a perspective with a contextual focus on the Commonwealth Caribbean in general and Trinidad and Tobago in particular. In doing so, 47 companies on the stock exchanges of Trinidad and Tobago and Jamaica were studied to test the level of adherence with internationally accepted CG standards. The findings show significant levels of compliance and some interesting disparities as well.

 
 
 

If one assumes that capitalism is the dominant economic model in the world today as Thurow (1997) suggests, then one might trace the rise of accountability and control as key organizational issues within this socio-economic context to better understand the rise of the concept of CG. Writing in the 18th century at the dawn of the industrial revolution, Adam Smith mooted that conflict can arise if companies are run by managers who are not owners. He posited that salaried managers could not be expected to watch over the money of other investors with the same care with which they would look after their own (Smith and Krueger, 2003). While Smith made his case, the United States and the rest of Europe entered a new phase in economic development with the advent of transport and communication systems (rail and telegraph systems), which allowed firms to sell to distant markets and take advantage of the scale and scope of opportunities. The significant investment and the operational complexities posed by such expansion, accompanied a new trend for owners to become separated from managers and gave rise to the modern industrial corporation (Chandler, 1990).

As enlarged firms grew further in complexity, the trend was reinforced and owners became the investors, which, as a class, had neither the expertise, experience, information, inclination nor time to manage the affairs of the business themselves, thus cementing the role of the salaried manager as an essential element of corporate life. This manager eventually became the person who would make decisions about resource allocations even though they were not the owners of those resources or the enterprise they ran (Chandler, 1990; and Freeman and Soete, 2000). In addition, the introduction of the limited liability company (Limited Liability Act of 1855 in the UK) reduced the personal risks of investment and therefore boosted the economic activity and investment in startups and expansion considerably (Chandler, 1969; Porter, 1980; and Tricker, 2000).

 
 
 

Corporate Governance, CG, Transport Communication systems, Institutional governance systems, London Stock Exchange market, Telecommunications Services of Trinidad and Tobago Ltd., TSTT, Economist, Corporate strategy.