Closing the Governance Gap in Joint Ventures
Businesses are increasingly partnering to meet their strategic objectives — but neglecting governance puts JVs and their shareholders at risk.
Twelve years ago, we co-authored with CalPERS a set of guidelines for joint venture governance.
At the time we argued, and still believe, that good governance in joint ventures strongly correlates with sustained financial performance, sound management of risks, and the ability of JVs to adapt to the changing needs of the market and their shareholders. We have asserted that joint venture governance is pound-for-pound more ‘physical’ than corporate governance due to the unique nature of a joint venture’s relationship with its shareholders. While the number of shareholders is far more limited in JVs compared to those of public companies, the interests of the shareholders in JVs is more expansive, dynamic, and prone to conflict—which ultimately makes joint venture governance proportionately more demanding and consequential.
Read the full article originally published in the Harvard Law School Forum on Corporate Governance.