Governance ideas offered by experts.

• Position: Business Briefs - Corporate governance - Brief Article

The stock market bubble of the late 1990s was driven by short-term thinking and greed, and the outlook for aligning corporate policy with long-term value creation isn't good, cautioned a trio of experts speaking at a recent panel on corporate governance.

"What I call a happy conspiracy' drove the bubble. Shareholders joined in this; there were a lot of unrealistic expectations," said John C. Bogle, the founder of The Vanguard Group and a prominent voice in the mutual fund industry. Bogle was joined at the session at New York's Baruch College by former SEC Chairman Arthur Levitt and William Christ, chairman of the board of CalPERS, the huge pension fund.

Noting that the average mutual fund has an annual turnover of 111 percent -- meaning, in effect, that it holds a stock for just 11 months -- Bogle said the fund industry "has to be accountable" for much of the speculative fervor and the resulting pressures on management to produce short-term results. "We've gotten the corporate governance we deserve," he said. Added Christ: "Improving governance is the way to improve the performance of a business."

There was a consensus among the three that small shareholders need to band together somehow to speak for the interests of long-term investors. "A short-term focus gets in the way of voting for [stronger] corporate governance," Bogle said. "Shareholders are the dominant constituency" in corporate...