David Larcker, Brian Tayan

Corporate Governance Matters (eBook, ePUB)

A Closer Look at Organizational Choices and Their Consequences

• Format: ePub

Produktbeschreibung

Corporate Governance Matters brings together comprehensive and objective information for directors and others seeking to improve corporate governance. Writing specifically for practitioners, the authors thoroughly examine the choices available in designing governance systems, explaining what is known about how these choices impact organizational performance.

The authors avoid ideological preconceptions and unsupported opinion, taking an empirical approach that relies on the available statistical and research evidence. Each chapter focuses on one governance feature, reviewing its potential benefits and costs. The authors present conclusions where the evidence supports them and candidly identify areas where broad conclusions cannot be drawn.

Corporate Governance Matters thoroughly addresses key issues ranging from strategic oversight to risk management, succession planning to compensation. Thoughtful and measured throughout, it will be an indispensable resource for directors, policymakers, institutional investors, and researchers alike.

Assessing Board of Directors' roles

Understanding board duties, liability, selection, compensation, removal, and structure

Compensating and motivating executives

Assessing executive labor markets and planning compensation, incentives, and equity

Ensuring effective reporting and control

Improving the effectiveness of audit committees and external auditors

Understanding external influences

Evaluating institutional shareholders, activist investors, proxy advisory firms, and governance ratings

"An outstanding work of unique breadth and depth providing practical advice supported by detailed research."

--Alan Crain, Jr., Senior Vice President and General Counsel, Baker Hughes

"Extensively researched, with highly relevant insights, this book serves as an ideal and practical reference for corporate executives and students of business administration."

--Narayana N.R. Murthy, Infosys Technologies

"Fascinating, engaging, and full of useful information-a must-read!"

-Heidi Roizen, Founder, CEO and Chief Lyrical Officer, Skinny Songs

"A tour de force. David Larcker and Brian Tayan have written an easy-to-read, crucial-to-know overview of corporate governance today."

--Stephen A. Miles, Vice Chairman, Heidrick & Struggles

"Corporate Governance Matters is sure to become required reading for director education and an essential desk reference for all corporate governance practitioners."

--Abe M. Friedman, Managing Director, BlackRock

"David Larcker and Brian Tayan are the premier students and among the most thoughtful authorities on corporate governance."

--Arthur Rock, Principal of Arthur Rock & Co.

"Corporate Governance Matters is a comprehensive, objective, and insightful analysis of academic and professional research on corporate governance."

--Professor Katherine Schipper, Duke University, and former member of the Financial Accounting Standards Board

"They did it! Larcker and Tayan have cracked the code on the connections between corporate governance and corporate performance."

--Ira Kay, Managing Partner, Pay Governance LLC

"When it comes to corporate governance, it seems that everyone has an opinion. David Larcker and Brian Tayan, however, have the facts."

--Professor Joseph A. Grundfest, Stanford Law School

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Produktdetails

• Verlag: Pearson ITP
• Erscheinungstermin: 14. April 2011
• Englisch
• ISBN-13: 9780132367073
• Artikelnr.: 44153651

Autorenporträt

David Larcker is James Irvin Miller Professor of Accounting at the Graduate School of Business of Stanford University; Director of the Corporate Governance Research Program; Senior Faculty, Arthur and Toni Rembe Rock Center for Corporate Governance. David's research focuses on executive compensation, corporate governance, and managerial accounting. He has published many research papers and is frequently quoted in both the popular and business press. He received his BS and MS in engineering from the University of Missouri-Rolla and his PhD in business from the University of Kansas. He previously was on the faculty of the Kellogg Graduate School of Management at Northwestern University and The Wharton School at the University of Pennsylvania. Professor Larcker presently serves on the Board of Trustees for the Wells Fargo Advantage Funds.

Brian Tayan is a member of the Corporate Governance Research Program at the Stanford Graduate School of Business. He has written broadly on the subject of corporate governance, including case studies and other materials on boards of directors, succession planning, executive compensation, financial accounting, and shareholder relations. Previously, Brian worked as a financial analyst at Stanford University's Office of the CEO and as an investment associate at UBS Private Wealth Management. He received his MBA from the Stanford Graduate School of Business and his BA from Princeton University.

Together, Larcker and Tayan have co-authored many case studies and articles on governance.

Additional resources and supporting material for this book are available at:

Stanford Graduate School of Business

The Corporate Governance Research Program

www.gsb.stanford.edu/cgrp/

Inhaltsangabe

Preface     xviii
Chapter 1  Introduction to Corporate Governance     1
Self-Interested Executives    4
Defining Corporate Governance     8
Corporate Governance Standards     9
Best Practice or Best Practices? Does One Size Fit All?     12
Relationship between Corporate Governance and Firm Performance     13
Endnotes     15
Chapter 2  International Corporate Governance     19
Capital Market Efficiency     19
Legal Tradition     22
Accounting Standards     23
Enforcement of Regulations     25
Societal and Cultural Values     26
Individual National Governance Structures     28
    United States     29
    United Kingdom     31
    Germany     35
    Japan     37
    South Korea    40
    China    41
    India    43
    Brazil    44
    Russia    46
Endnotes    47
Interlude     53
Chapter 3  Board of Directors: Duties and Liability     55
Board Responsibilities     55
Board Independence     56
The Operations of the Board     57
    Board Committees     60
Duration of Director Terms     64
Director Elections     64
Removal of Directors     66
Legal Obligations of Directors     66
    Fiduciary Duty     67
    Environmental, Social, and Governance (ESG)     70
    Disclosure Obligations under Securities Laws     71
    Legal Enforcement of State Corporate Law (Fiduciary Duties)     72
    Legal Enforcement of Federal Securities Laws     73
    Director Indemnification and D&O Insurance     73
Endnotes     75
Chapter 4  Board of Directors: Selection, Compensation, and Removal     79
Market for Directors     79
    Criteria for Director Recruitment     80
    Active CEOs     81
    International Experience     82
    Special Expertise     82
    Diverse Directors     84
    Professional Directors     85
    Disclosure Requirements for Director Qualifications     86
Director Recruitment Process     87
Director Compensation     90
    Ownership Guidelines     95
    Board Evaluation     96
Removal of Directors     98
Endnotes     102
Chapter 5  Board of Directors: Structure and Consequences     109
Board Structure     110
    Chairman of the Board     113
    Lead Independent Director     116
    Outside Directors     119
    Board Independence     122
    Independent Committees     125
    Bankers on the Board     126
    Financial Experts on Board     127
    Politically Connected Boards     127
    Employee Representation     129
    Boards with Busy Directors     131
    Interlocked (or Connected) Boards     134
    Committee Overlap     135
    Board Size     136
    Board Diversity     136
    Female Directors     138
Summary     139
Endnotes     141
Interlude     150
Chapter 6  Strategy, Performance Measurement, and Risk Management     151
Organizational Strategy     151
Strategy Implementation Process     154
Business Model Development and Testing     156
    Example 1: Fast-Food Chain and Employee Turnover     156
    Example 2: Financial Services Firm and Investment Advisor Retention    
158
Key Performance Measures     159
How Well Are Boards Doing with Performance Measures and Business
Models?     162
Risk and Risk Management     164
Risk and Risk Tolerance     165
Risk to the Business Model     166
Risk Management     169
Oversight of Risk Management     172
Assessing Board Performance on Risk Management     174
Cybersecurity     175
Endnotes     177
Chapter 7  CEO Selection, Turnover, and Succession Planning     181
Labor Market for Chief Executive Officers     181
Labor Pool of CEO Talent     184
CEO Turnover     186
Newly Appointed CEOs     191
Models of CEO Succession     193
    External Candidate     193
    President and/or Chief Operating Officer     195
    Horse Race     196
    InsideOutside Model     197
The Succession Process     197
How Well Are Boards Doing with Succession Planning?     201
Executive Search Firms     203
Endnotes     205
Chapter 8  Executive Compensation and Incentives     211
The Controversy over Executive Compensation     212
Competing Theories of CEO Pay     213
Components of Compensation     214
Determining Compensation     218
Compensation Consultants     221
Compensation Levels     221
Ratio of CEO Pay to Other Top Executive Pay     226
Ratio of CEO Pay to Average Employee Pay     229
Compensation Mix     230
Short-Term Incentives     233
Long-Term Incentives     235
Benefits and Perquisites     237
Compensation Disclosure     238
Say-on-Pay     239
Competing Theories of CEO Pay     242
Endnotes     243
Chapter 9  Executive Equity Ownership     251
Equity Ownership and Firm Performance     251
Equity Ownership and Risk     254
Equity Ownership and Agency Costs     259
Accounting Manipulation     260
Manipulation of Equity Grants     261
    Other Examples of Value Extraction through Timing     263
Equity Sales and Insider Trading     264
Rule 10b5-1     267
Hedging     269
Pledging     273
Repricing and Exchange Offers     274
Endnotes     277
Chapter 10  Financial Reporting and External Audit     285
The Audit Committee     285
Accounting Quality, Transparency, and Controls     286
Financial Reporting Quality     288
    Non-GAAP Reporting     290
Financial Restatements     291
Models to Detect Accounting Manipulations     297
The External Audit     299
Audit Quality     302
Structure of Audit Industry     302
Impact of SarbanesOxley     305
External Auditor as CFO     307
Auditor Rotation     308
Endnotes     310
Chapter 11  The Market for Corporate Control     319
The Market for Corporate Control     320
Stock Market Assessment of Acquiring and Target Firms     324
    Who Gets Acquired?     324
    Who Gets the Value in a Takeover?     327
Antitakeover Protections     330
Antitakeover Actions     331
    Poison Pills     333
    Staggered Board     335
    State of Incorporation     337
    Dual-Class Shares     339
Warding Off Unwanted Acquirers     341
Endnotes     344
Chapter 12  Shareholders and Shareholder Activism     351
The Role of Shareholders     351
Blockholders and Institutional Investors     354
Institutional Investors and Proxy Voting     357
Activist Investors     359
    Pension Funds     361
    ESG and Socially Responsible Investing     363
    Individual Activist Investors     364
    Activist Hedge Funds     366
The Rise of Index Investing     370
Shareholder Democracy and Corporate Engagement     371
    Majority Voting in Uncontested Director Elections     371
    Proxy Access     372
    Proxy Voting     372
    Corporate Engagement     374
Proxy Advisory Firms     375
Endnotes     381
Chapter 13  Stakeholders and Stakeholder Activism     391
Pressure to Incorporate Stakeholder Interests     392
Legal and Economic Implications     397
Director and CEO Views on Stakeholders    401
ESG Metrics and Disclosure    402
External Assessment of ESG    407
Endnotes    417
Chapter 14  Corporate Governance and ESG Ratings    425
Third-Party Ratings    425
Credit Ratings    426
Commercial Corporate Governance Ratings    428
    ISS: Corporate Governance Quotient    428
    ISS: Governance Risk Indicators    430
    ISS: QualityScore    430
    MSCI ESG Governance Metrics    431
    Testing the Predictability of Corporate Governance Ratings    432
Governance Rating Systems by Academic Researchers    433
The Viability of Governance Ratings    438
ESG Ratings    439
    MSCI ESG    440
    Sustainalytics    441
    Vigeo Eiris    442
    HIP (Human Impact + Profit)    442
    ISS E&S Disclosure QualityScore    442
    TruValue Labs    443
    Evaluation of ESG Ratings    443
Endnotes    444
Chapter 15  Alternative Models of Governance    449
Family-Controlled Corporations    449
Venture-Backed Companies    452
Private Equity-Owned Companies    458
Nonprofit Organizations    462
Endnotes    466
Chapter 16  Summary and Conclusions    473
Testing Remains Insufficient    474
The Current Focus Is Misdirected    475
Important Variables Are Clearly Missing    476
Context Is Important    477
Rights of Shareholders and Stakeholders    478
Endnotes    478
Index    481