IN early 2017, the FINEX Board led by president Benedicta “Dick” Du-Baladad decided to publish a book on corporate governance to mark the Institute’s golden jubilee in January 2018. As suggested by FINEX past president Melito Salazar, this book will be widely disseminated to business professors and students of business in order to propagate a deeper appreciation of the role played by financial executives in enterprise management.
This book is entitled Pillars of Good Governance primarily to signify FINEX’s staunch advocacy of continually adhering to the highest standards of ethical and socially beneficial practices in enterprise as well as public sector management.
In retrospect, the groundwork for this book project began more than a decade ago. The initial idea was to underscore the role of chief finance officers (CFOs) as prime movers of good governance. In 2016, the annual search for CFO of the Year jointly undertaken by FINEX and the ING Bank N.V. Manila branch was themed “The Decade of the CFO: Championing Good Governance.”
A closer look at the criteria used to select the CFO of the Year brings to the fore the significant influence of the Global CFO Study conducted by the International Association of Financial Executives Institutes (IAFEI) in 2005-2006 when its chairman was Dr. Conchita Manabat, FINEX past president.
When Dr. Manabat served as a resource person in the French Annual Financium in Paris, an event similar to the FINEX Week, she witnessed the honoring of the outstanding CFOs in different fields during the gala night. Hence, she broached the idea of launching a similar search for outstanding CFOs project to then FINEX president Abelardo “Billy” Cortez, who eventually convinced ING Bank N.V. Manila Branch to be FINEX’s partner. “The rest,” says Dr. Manabat, “is history.”
In 2007, The Power to Govern, a compendium of the Organization for Economic Cooperation and Development’s (OECD) Principles of Corporate Governance, as well as several case studies on Philippine corporations and organizations, was published by the P&A Foundation, with Gregorio Navarro as editor. Greg Navarro went on to serve as FINEX president in 2010.
He acknowledged that this book grew out of a project of the FINEX good governance and ethics committee, which he headed as chairman in 2005. He wrote: “At the time, Enron was the most studied, written-about corporate scandal; it was used to demonstrate how those in charge of governance failed in many ways and, together with Arthur Andersen, was the favorite whipping boy of many a lecturer on corporate shenanigans. The committee members were all sold on the need for local governance case studies and many volunteered to do the job.”
Significant progress has been made toward raising the level of general awareness and consciousness within the past decade following the publication of that first FINEX-inspired book on corporate governance. Hopefully, this second FINEX book will provide the momentum for even more rapid forward strides.
Chapter 1 discusses Why Good Governance Matters. The costs of deviating from the norms of good governance are high and the harmful consequences are pervasive. Over the past two decades, the specter of two major financial crises–the Asian crisis of 1997 and the Wall Street collapse of 2008–continues to haunt corporate boardrooms and the highest echelons of government decision-making. After bearing the burden of being branded as “the sick man of Asia,” the Philippine economy has rebounded. A new trajectory of sustained growth has primed the country for shedding off its Third World status. Good governance is seen as the pivotal factor for this turnaround.
Chapter 2 focuses on Institutions of Good Governance. The Organization for Economic Cooperation and Development (OECD), in partnership with the G20 countries representing the most advanced economies, has taken the lead in formulating guidelines and benchmarks for corporate governance that have gained universal acceptance. The Asian Corporate Governance Association has established similar baselines. The World Economic Forum’s competitiveness rankings are also seen as appropriate measures for assessing the state of corporate governance. In the Philippines, the Securities and Exchange Commission has exercised leadership in formulating a comprehensive blueprint for good corporate governance, including a five-year road map from 2015 to 2020. In November 2016, the SEC further raised the bar of excellence by issuing Memorandum Circular 19, the Corporate Governance Code for Publicly-Listed Companies.
Chapter 3 is entitled CFOs: Stewards and Catalysts of Good Governance.
The spotlight is beamed on the evolving role of the CFO and the competencies that are deemed vital in the exercise of the CFO function. The 2007 Deloitte study established the foundation for the CEO competency map that has been adopted by the IAFEI and its various affiliates. A survey of the perspectives of the ING-FINEX CFO of the Year awardees reflects broadly held views on the need for sustainability of governance practices as well as adherence to high ethical standards by leaders and executives of organizations.
Chapter 4 is on Exemplars of Good Governance: CFOs of the Year.
Each of the winners of FINEX-ING Bank’s annual search is featured. Since 2007, twelve winners have been chosen, each of them truly outstanding and worthy of emulation. The selection of the CFO of the Year has become a much-awaited event, a testament to the prestige and respect accorded to those who have earned the recognition.
Chapter 5 is about Personal Governance.
Enlightened individuals who have attained a measure of personal mastery in terms of fulfilling their own personal vision and mission are primed to contribute significantly to building a culture of good governance. We round off this volume on corporate governance with a discussion on the role that up-and-coming potential leaders–popularly labeled as “millennials”–may play in corporate and public sector boardrooms.
The book is authored by FINEX past director Sonny Coloma who served as Communications Secretary during the administration of President Benigno Aquino 3rd.
The field of corporate governance study awaits the participation of more dedicated researchers and practitioners. As FINEX marches on from its golden jubilee to its century year, new lessons and insights are likely to be learned. From its ranks will emerge many more outstanding financial executives who will ensure that enlightened advocates of good corporate governance lead progressive and socially responsible organizations.