After the OFR: Can UK Shareholder Value Still be Enlightened?

Posted: 19 Feb 2007

Abstract

This article examines the likely impact of the United Kingdom's Company Law Review (CLR) on its system of corporate governance. The CLR recommended that company law should be amended to require companies to pursue "enlightened shareholder value." This would be ensured primarily through a requirement on listed companies to produce an Operating and Financial Review (OFR). The OFR was introduced into law but was recently unexpectedly abolished by the Chancellor. The article examines the theoretical approach taken to corporate governance by the CLR and the way in which the OFR was expected to affect corporate governance. It then asks whether shareholder value would in fact have been enlightened by the OFR, given the institutional context in which it would have operated. While there are considerable grounds for scepticism about whether the OFR would have worked as the CLR expected, it is unfortunate that it was withdrawn because it was an important experiment in disclosure of qualitative information about intangible assets. The article concludes with some thoughts about whether shareholder value could still be enlightened in the absence of a mandatory OFR.

Keywords: corporate governance, enlightened shareholder value, institutional investors, company law reform, qualitative disclosure

JEL Classification: K20

Suggested Citation

Johnston, Andrew, After the OFR: Can UK Shareholder Value Still be Enlightened?. European Business Organization Law Review (EBOR), Vol. 7, 2006 , Available at SSRN: https://ssrn.com/abstract=963393

Andrew Johnston (Contact Author)

Warwick Law School ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

HOME PAGE: http://https://warwick.ac.uk/fac/soc/law/people/andrew_r_johnston/

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