Corporate Governance in the Canadian Resource and Energy Sectors

Abstract

This article reports the results of a qualitative empirical study of the corporate governance practices of 23 resource and energy sector firms in Canada. The authors examine public disclosure and other documents filed by subject firms in each ofthe oil and energy, oil and gas trust, precious metal and forestry sectors and compare the firms' governance practices against ten indicia of effective governance advocated by regulators and stock exchanges. The working hypothesis ofthe article is that due to the global scope of the subject sectors, the sample firms may be better developed than, or have unique qualities compared to, firms in other sectors. The authors conclude that the sample firms perform reasonably well against the ten indicia. However there are significant sectoral differences.

The authors note nearly all subjects have adopted codes of corporate conduct and an overall commitment to comply with new, more rigorous audit committee standards. Weaknesses include a lack of board diversity as one indicator of board independence, lack of formalized continuing education and uneven evaluation processes for corporate boards. Although this study provides insight into Canadian resource and energy sector governance practices, the authors note the need to dedicate more resources to developing consistent and independent standards to use as benchmarks in evaluating corporate governance practices.