Corporate Governance Matters, 3rd Edition

Corporate Governance Matters, 3rd Edition

by David Larcker, Brian Tayan
Released November 2020
Publisher(s): FT Press
ISBN: 9780136660019

Read it now on the O’Reilly learning platform with a 10-day free trial.

O’Reilly members get unlimited access to books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.

Start your free trial

Book description

Corporate Governance Matters, 3rd Edition gives corporate board members, officers, directors, and other stakeholders all the knowledge they need to implement and sustain superior governance in today’s challenging business environments. Authored by two leading experts, it fully addresses every component of governance, reflecting the latest trends and statistics. Updated throughout, it carefully synthesizes current academic and professional research, summarizing what is known, what is unknown, and where the evidence remains inconclusive. Coverage includes: international corporate governance; equity ownership; incentives; labor markets for CEOs; board structures; linkages to organizational strategy and business models; risk management, succession planning, financial reporting and external audit; governance ratings; and alternative corporate governance structures, including family-controlled businesses, nonprofits, private equity, and venture capital. This edition includes expanded coverage of many core and emerging issues, including:

  • Environmental, Social, and Governance (ESG)
  • Board effectiveness
  • CEO succession
  • CEO compensation
  • Cybersecurity and risk
  • Shareholder activism, and more

Throughout, the authors’ models and frameworks demonstrate how components of governance fit together, with examples and scenarios illustrating key points. Their balanced approach is focused strictly on two goals: to ‘get the story straight,’ and to provide useful tools for making better, more informed decisions.

Table of contents

  1. Cover Page
  2. About This eBook
  3. Halftitle Page
  4. Title Page
  5. Copyright Page
  6. Contents at a Glance
  7. Contents
  8. Register Your Book
  9. Acknowledgments
  10. About the Authors
  11. Preface
  12. 1. Introduction to Corporate Governance
    1. Self-Interested Executives
    2. Defining Corporate Governance
    3. Corporate Governance Standards
    4. Best Practice or Best Practices? Does “One Size Fit All”?
    5. Relationship between Corporate Governance and Firm Performance
    6. Endnotes
  13. 2. International Corporate Governance
    1. Capital Market Efficiency
    2. Legal Tradition
    3. Accounting Standards
    4. Enforcement of Regulations
    5. Societal and Cultural Values
    6. Individual National Governance Structures
    7. Endnotes
    8. Interlude
  14. 3. Board of Directors: Duties and Liability
    1. Board Responsibilities
    2. Board Independence
    3. The Operations of the Board
    4. Duration of Director Terms
    5. Director Elections
    6. Removal of Directors
    7. Legal Obligations of Directors
    8. Endnotes
  15. 4. Board of Directors: Selection, Compensation, and Removal
    1. Market for Directors
    2. Director Recruitment Process
    3. Director Compensation
    4. Removal of Directors
    5. Endnotes
  16. 5. Board of Directors: Structure and Consequences
    1. Board Structure
    2. Summary
    3. Endnotes
    4. Interlude
  17. 6. Strategy, Performance Measurement, and Risk Management
    1. Organizational Strategy
    2. Strategy Implementation Process
    3. Business Model Development and Testing
    4. Key Performance Measures
    5. How Well Are Boards Doing with Performance Measures and Business Models?
    6. Risk and Risk Management
    7. Risk and Risk Tolerance
    8. Risk to the Business Model
    9. Risk Management
    10. Oversight of Risk Management
    11. Assessing Board Performance on Risk Management
    12. Cybersecurity
    13. Endnotes
  18. 7. CEO Selection, Turnover, and Succession Planning
    1. Labor Market for Chief Executive Officers
    2. Labor Pool of CEO Talent
    3. CEO Turnover
    4. Newly Appointed CEOs
    5. Models of CEO Succession
    6. The Succession Process
    7. How Well Are Boards Doing with Succession Planning?
    8. Executive Search Firms
    9. Endnotes
  19. 8. Executive Compensation and Incentives
    1. The Controversy over Executive Compensation
    2. Competing Theories of CEO Pay
    3. Components of Compensation
    4. Determining Compensation
    5. Compensation Consultants
    6. Compensation Levels
    7. Ratio of CEO Pay to Other Top Executive Pay
    8. Ratio of CEO Pay to Average Employee Pay
    9. Compensation Mix
    10. Short-Term Incentives
    11. Long-Term Incentives
    12. Benefits and Perquisites
    13. Compensation Disclosure
    14. Say-on-Pay
    15. Competing Theories of CEO Pay
    16. Endnotes
  20. 9. Executive Equity Ownership
    1. Equity Ownership and Firm Performance
    2. Equity Ownership and Risk
    3. Equity Ownership and Agency Costs
    4. Accounting Manipulation
    5. Manipulation of Equity Grants
    6. Equity Sales and Insider Trading
    7. Rule 10b5-1
    8. Hedging
    9. Pledging
    10. Repricing and Exchange Offers
    11. Endnotes
  21. 10. Financial Reporting and External Audit
    1. The Audit Committee
    2. Accounting Quality, Transparency, and Controls
    3. Financial Reporting Quality
    4. Financial Restatements
    5. Models to Detect Accounting Manipulations
    6. The External Audit
    7. Audit Quality
    8. Structure of Audit Industry
    9. Impact of Sarbanes–Oxley
    10. External Auditor as CFO
    11. Auditor Rotation
    12. Endnotes
  22. 11. The Market for Corporate Control
    1. The Market for Corporate Control
    2. Stock Market Assessment of Acquiring and Target Firms
    3. Antitakeover Protections
    4. Antitakeover Actions
    5. Warding Off Unwanted Acquirers
    6. Endnotes
  23. 12. Shareholders and Shareholder Activism
    1. The Role of Shareholders
    2. Blockholders and Institutional Investors
    3. Institutional Investors and Proxy Voting
    4. Activist Investors
    5. The Rise of Index Investing
    6. Shareholder Democracy and Corporate Engagement
    7. Proxy Advisory Firms
    8. Endnotes
  24. 13. Stakeholders and Stakeholder Activism
    1. Pressure to Incorporate Stakeholder Interests
    2. Legal and Economic Implications
    3. Director and CEO Views on Stakeholders
    4. ESG Metrics and Disclosure
    5. External Assessment of ESG
    6. Endnotes
  25. 14. Corporate Governance and ESG Ratings
    1. Third-Party Ratings
    2. Credit Ratings
    3. Commercial Corporate Governance Ratings
    4. Governance Rating Systems by Academic Researchers
    5. The Viability of Governance Ratings
    6. ESG Ratings
    7. Endnotes
  26. 15. Alternative Models of Governance
    1. Family-Controlled Corporations
    2. Venture-Backed Companies
    3. Private Equity-Owned Companies
    4. Nonprofit Organizations
    5. Endnotes
  27. 16. Summary and Conclusions
    1. Testing Remains Insufficient
    2. The Current Focus Is Misdirected
    3. Important Variables Are Clearly Missing
    4. Context Is Important
    5. Rights of Shareholders and Stakeholders
    6. Endnotes
  28. Index

Product information

  • Title: Corporate Governance Matters, 3rd Edition
  • Author(s): David Larcker, Brian Tayan
  • Release date: November 2020
  • Publisher(s): FT Press
  • ISBN: 9780136660019