Welcome to your corporate governance briefing. There’s a plethora of topics up for discussion this week – from digital AGMs and geopolitical tensions to American companies facing legal risks over diversity policies.

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The importance of testing assumptions

Academic politics are so vicious because the stakes are so low, according to the old joke. But a controversy rocking the foundations of behavioural science is a higher-stakes battle than it might first appear.

As my colleague Andrew Jack and I have been reporting, high-profile Harvard Business School dishonesty expert Francesca Gino has herself been accused of dishonesty. The allegations, by a group of academics who publish the Data Colada blog, centre on the use of allegedly fraudulent data in published papers Gino has co-authored, many about ethics and honesty. 

Gino, a professor of business administration, has commented publicly once, on LinkedIn, saying she continues “to evaluate these allegations and assess my options . . . I want to assure you that I take them seriously and they will be addressed.” Harvard has not yet commented.

Why does this matter? As behavioural science’s findings have spread, popularised by books such as 2008’s Nudge, they have percolated quickly through academia, via consultancies, into business. If some of those findings are now unsound, impossible to replicate, or even fraudulent, that could affect companies and boards that have applied them.

Behavioural scientists point out that the vast majority of the science is solid. Magdalena Smith of Behaviour Lab, a consultancy that works with institutional investors, told me she believed there was “a sufficient amount of great academic work out there that’s constantly challenged [and is] foundationally important to organisations”. 

Evidence-based applications such as “opt out” policies that encourage pension contributions have had a positive impact. Proven research into factors such as status quo bias and groupthink contributes to the understanding of how boards make decisions. But the whole affair is a reminder about the need to test assumptions, whether in the lab or the boardroom.

As Smith put it, her firm goes through “a painstaking, constant loop of self-reflection where we truly are trying to understand what it is that we do and what effect it has.... Is it something the team can implement, is it something they can maintain, does it have any adverse effects?”

Chart of the week

Many in China worry that geopolitical tensions with the US-led west are rising just as its economic recovery is stalling.

Now Beijing is on a charm offensive, with US business leaders including Jamie Dimon, Elon Musk, Tim Cook and Bill Gates all making visits over recent months.

How will this play out? Will China be forced to choose whether to prioritise the economy over security? Or will the government tolerate relatively low growth while strengthening resilience to external threats?

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My top FT picks

Corporate diversity in the crosshairs after US Supreme Court ruling Risk: The decision against affirmative action in college admissions has led lawyers and conservative activists to warn that companies face a wave of legal challenges to their DEI policies The global industrial arms race is just what we need Industrial policy: This new age is beginning to reverse some secular macro trends including raising prices, inflation and interest rates – and boosting investment in manufacturing projects Tom Montag, the Wall Street veteran who is back at Goldman Sachs Board composition: It’s the same but different. Montag returns to the bank, this time as a director, at a point when its stock price is trailing rivals and morale has taken a hit Remote AGMs: the death of shareholder interactions Stakeholder engagement: “To cut out the opportunity for a relaxed dialogue with directors is totally unacceptable,” argues John Lee, an active private investor, noting that hybrid is the solution

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Best from elsewhere

1. US CEO compensation advantage grows vs UK peers | ISS Corporate Solutions This analysis looks at the pay gap between S&P 500 and FTSE 100 bosses from 2018 to 2022 in businesses where the same chief executive served for the full period. It found that median pay for S&P 500 CEOs ratcheted up 23 per cent over the time frame – while FTSE leaders enjoyed a smaller 1.1 per cent rise.

2. Why demographics matters more than ever | Insead Knowledge The population of South Korea reached about 52 million people in 2021. But if current fertility rates persist, a child born today will be one of only 6 million South Koreans on their 100th birthday. This is a fascinating read that explains how understanding the specifics of demographics can help businesses spot future opportunities and “warn them of vanishing markets”.

3. Global antitrust challenges for industry climate alliances and cooperation on environmental sustainability| Clifford Chance Many companies are looking to collaborate to improve their sustainability, but they must also comply with competition law. This briefing shares some insights into what businesses should consider, and outlines the legal situation in some key countries including the US, UK, Germany, France, Japan and Australia.

From FT Specialist’s Agenda

Audit committees overwhelmed under expanding remit
Factors adding pressure include the complex risk and business environment, and an uptick in regulatory reporting requirements in areas such as ESG

Any other business

Brodin, who runs Ingka Group, which operates the Ikea stores, discusses how he transformed the furniture group in the face of “the technology revolution and new retailing” – and why he gives his top team a “license to go bananas” card.

Have words of wisdom to share? Email me.