Home > Store

Corporate Governance Matters, 3rd Edition

eBook

  • Your Price: $53.59
  • List Price: $66.99
  • Includes EPUB and PDF
  • About eBook Formats
  • This eBook includes the following formats, accessible from your Account page after purchase:

    ePub EPUB The open industry format known for its reflowable content and usability on supported mobile devices.

    Adobe Reader PDF The popular standard, used most often with the free Acrobat® Reader® software.

    This eBook requires no passwords or activation to read. We customize your eBook by discreetly watermarking it with your name, making it uniquely yours.

Also available in other formats.

Register your product to gain access to bonus material or receive a coupon.

Description

  • Copyright 2021
  • Pages: 528
  • Edition: 3rd
  • eBook
  • ISBN-10: 0-13-665997-7
  • ISBN-13: 978-0-13-665997-6

The Definitive Guide to High-Performance Corporate Governance


Fully updated for the latest research, trends, and regulations, Corporate Governance Matters, Third Edition, offers comprehensive and objective information for everyone seeking to improve corporate governancefrom directors to institutional investors to policymakers and researchers.


To help you design highly effective governance, David Larcker and Brian Tayan thoroughly examine current options, reviewing what is and isn't known about their impact on organizational performance. Throughout, they take a strictly empirical and non-ideological approach that reflects rigorous statistical and research analysis and real-life examples. They address issues ranging from board structure, processes, operations, and functional responsibilities to institutional investors, outside stakeholders, and alternative forms of governance.


New discussions of:

  • Environmental, Social, and Governance (ESG) activity and ratings
  • Stakeholder interests
  • CEO activism
  • CEO misbehavior
  • Cybersecurity risks

Extensively revised coverage of:
  • Executive compensation
  • Leadership and succession planning
  • Director recruitment, evaluation, turnover, and more

Sample Content

Sample Pages

Download the sample pages (includes Chapter 13)

Table of Contents

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


Updates

Submit Errata

More Information

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020