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CEOs call for certainty in regulation

Business is annoyed not so much by regulation as by changing regulation, according to a survey.

Business leaders accept that in an interconnected global economy there will always be a regulatory burden; the challenge for business and governments is to ensure the burden is justified by the benefits it produces.

This is one of the findings from the new annual Regulate & Collaborate: Government and the Global CEO survey undertaken to supplement PricewaterhouseCoopers annual global CEO survey.

One of the key findings of this study, which involved a series of in-depth interviews with public sector government leaders, is an apparent paradox: business wants both more and less from government.

It wants leadership from government to deal with truly global risks such as climate change and to ensure markets and competition are fair.

The survey shows that CEOs want business to be less tied down by regulation.

The survey also reveals, however, that CEOs increasingly recognise that they have a key role in working with government to find solutions to global risks and in playing a constructive part in the regulatory process.

Charles Lloyd, partner in the government and public sector practice at PricewaterhouseCoopers, said that business is not always averse to regulation, especially when it helps maintain the type of fair markets and level playing fields on which businesses can compete, innovate and differentiate themselves.

“If both business and government accept this, the challenge is then to establish that the burden is justified by the benefits it produces,” he added.

The survey reveals that on average more than half of CEOs believe government should drive convergence of global tax and regulatory frameworks.

A country breakdown reveals some stark differences, however, from more than 75 per cent of CEOs believing this in Italy, Brazil, Germany and India, to only a quarter in the UK.

The call for more concerted government action also comes in the area of labour and tax laws, where an average of around 40 per cent of CEOs seek improvement.

Only in India and China is there an overall balance of CEOs who believe their government is both business friendly and reducing the regulatory burden.

In France, CEOs believe government to be business friendly but not reducing the burden on business.

Japan, by contrast, is the only country where government is seen to be reducing the burden on business, while still seen as unfriendly to business.

Lloyd explained that CEOs want regulatory certainty against which to plan.

“Generally business prefers long-term frameworks that create and sustain stability within which business decisions can be made. Business is annoyed not so much by regulation as by changing regulation,” he added.

Governments take widely differing approaches to dealing with the paradox of more or less regulation.

Some do nothing, while others feel the need to be ‘doing something’ to address public concerns, and often end up intervening too much.

Lloyd explained that government needs to find a way to strike the right balance between these two extremes, while avoiding the pitfall of engaging in ‘tokenistic’ de-regulation which has little real impact.

The Regulate & Collaborate: Government and the Global CEO report probes other topical areas, including government-to-government and government-to-business collaboration; the global challenge of climate change; and the future for public-private partnerships.

The report will be available from 31 March 2008 on the Public Sector Research Centre website 

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