A Corporate Geography of Canada: Insights into a Multi‐Jurisdictional Model of Corporate Governance

Abstract

Comparative corporate governance has long focused on national models of corporate governance with particular attention paid to the balance of influence between divergent path dependence and convergent global market forces. Within this debate, the Canadian model of corporate governance has received little attention and has long been assumed to be an extension of the U.S. model. An analysis of the corporate geography of Canada demonstrates that the pathdependent forces of Canada's resource-dependent economic development remain a principal determinant in contemporary corporate Canada. Continued resource dependence in combination with a system of asymmetric federalism has led to a distinctively multi-jurisdictional model of corporate governance. As corporate interests are provincially distinct because of the heterogeneous distribution of natural resources and markets across Canada, this model may lead to provincial lock-in and an associated degree of managerial entrenchment.g row_535 467..494

Channels of Convergence: Investor Engagement and Interlocked Directorates

“…On the basis of listing codes of the North America Industry Classification System 2007 I classified all corporations as belonging to the broad categories of finance, forestry and paper; mining and extractives; oil and gas; and all remaining corporations under the heading of products and services. This classification system was chosen so as to correspond with that I used elsewhere (Gray, 2010) in the analysis of the regulatory component of the Canadian model of corporate governance.…”

“…As such the 749 interlocks originating from the index corporations can effectively insert into any of the nine provincial jurisdictions which retain TSX-listed corporate headquarters. Although there is a strong landscape of institutional forces promoting intrajurisdictional lock-in (Gray, 2010) a majority (51.8%) of interlocked directorates occur interjurisdictionally. These interprovincial pipelines can be formed with origins and insertions in either of the two respective provinces and still contribute to the generation of the same interprovincial pipeline.…”

“…Although Canada's regulatory landscape is conducive to regulatory arbitrage, corporations appear to remain predominantly incorporated and headquartered within one particular provincial/territorial jurisdiction based on access to resources and markets. As such, the Canadian model of corporate governance is distinctive for its pronounced multijurisdictional character (Gray, 2010).…”

“…Within this paper I analyze the distribution of the institutional investorî nterlocked directorate pipelines across Canada. It is surprising that Canada remains little studied in the research agenda of the geography of finance given that Canada's asymmetric federalism results in a distinctively multijurisdictional model of corporate governance (Gray, 2010), a fact which should be of intrigue to many economic geographers. As a starting point I focus on institutional investor engagement with the Standard and Poor's/Toronto Stock Exchange 60 (S&P/TSX 60) index corporations as these corporations represent nearly 73% of the market capitalization of the Toronto Stock Exchange (TSX) (S&P, 2009) and as such are often considered to be the preferred investment recipients of large institutional investors (Ferreira and Matos, 2008).…”

Exploring the Personal Histories of the Top Executives ofUSFirms Using a Quantitative Approach: Is There a Geographical Relationship with Corporate Headquarters, and Does It Influence Firm Performance?

“…Within a Dutch context, Van Reine and Dankbaar () find that openness to outside influences is crucial for firm innovativeness. In a yet a further analysis of corporate governance, Gray () argues that the path‐dependent forces of Canada's resource‐dependent economy remains a key determinant in that country today, both positively and negatively – with perhaps a subnational economic geography more relevant than previously identified.…”