There are two dimensions of trust here: trust by owners/investors in management to deliver the outcomes sought by the investors; and trust by owners/investors that management will apply robust strategies/methods that will optimise the cost / risk / benefits algorithm to investors in achieving those outcomes.

Corporate Governance doesn't affect the first and only partially affects the second.

Trust therefore, becomes critical - yet there are scores (thousands?) of examples of breaches in the first dimensions and equally in the second dimension of trust.

In order to improve the situation for investors, one must LOWER THE RELIANCE on trust. To do this one needs to make the first dimension less subjective (management's) and the second dimension more transaparent so that executives are held to account for delivery of the first dimension metrics.

Without knowing what shareholders want in measurable and quantifiable terms, having robust governance is almost pointless....and no listed corporation really knows what its shareholders want.

Intuitively one would expect that small organisations with few shareholders are more “in-touch” with their owners’ objectives than larger organisations. One would further expect that the larger the organisation and the greater the number of shareholders, then the less able the organisation is to keep “in-touch” with all shareholder objectives.

Unfortunately, experience and reality show that companies, irrespective of size, are not immune from the lack of congruence between owner objectives and corporate actions.

The majority of companies are small businesses who have one or a small number of people carrying out the roles of managers, directors and owners simultaneously. One would expect that since one person carries out all three roles then “knowledge” would be “perfect” and congruence would be maximised.

Most small businesses actually have difficulty in ensuring congruence because they are too involved in operational management. It is easier to change the objective than to change the operational, marketing or business realities that threaten incongruence.

Generally boards and management of large corporations maintain that since they have many shareholders with varying objectives and they can’t effectively ask shareholders what they want; the board has the responsibility to define the core deliverables of the organisation. These deliverables are intended to keep shareholders satisfied. For reasons identified earlier, such presumptions by boards are often misplaced because they are subjectively derived. The demonstrable fact is that many (most?) corporations do not know what their owners want in any realistic, practical and measurable way.

In the case of medium size companies where management may be divorced from directorship and/or ownership, it is common to find organisations intent on striving to maximise generic outcomes rather than satisfy specific owner objectives. Certainly, a large part of this lack of congruence is caused by management failing to ask owners what they want; but equally at fault, are owners who have not made the effort of telling management in realistic and measurable terms what it is that they desire from their involvement in the company.

Very few companies, irrespective of size, really know what their owners want. In the case of small business, the owner/manager has rarely defined what it is that is wanted so that it becomes the principal driver of business performance.