Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices

CHAPTER 66

CORPORATE GOVERNANCE: UNITED STATES

Anthony Tarantino, PhD

66.1 THE U.S. CORPORATE GOVERNANCE MODEL

66.2 U.S. REGULATORY AGENCIES AND REGULATIONS OF INTEREST

66.3 WORLD BANK RATINGS FOR SIX ELEMENTS OF GOVERNANCE

66.4 COMPETITIVENESS OF U.S. MARKETS

66.5 HIGHER U.S. UNDERWRITING FEES DRIVE UP IPO COSTS

66.6 IMPROVED GOVERNANCE DOES NOT TRANSLATE INTO HIGHER GROWTH RATES

66.7 INVESTOR SURVEYS INDICATE DISSATISFACTION WITH U.S. CORPORATE GOVERNANCE

66.8 EXECUTIVE COMPENSATION

66.9 SUGGESTIONS TO IMPROVE BOARD OF DIRECTOR GOVERNANCE

66.10 CONCLUSION

NOTES

66.1 THE U.S. CORPORATE GOVERNANCE MODEL

The Federal System. In most nations, the central government has primary responsibility over corporations. The U.S. federal system is different with the 50 individual states possessing primary responsibility over corporate law. This translates into 50 flavors of corporate and security (blue sky) laws, regulatory agencies, and court systems. More than half of major corporations are incorporated in the state of Delaware. This is because of its business-friendly corporate legal environment and its state court dedicated to resolving business issues. Most states, but not Delaware, follow the American Bar Association's Model Business Corporation Act. On a national level, the Securities and Exchange Commission (SEC) and federal courts are charged with enforcing federal laws and regulations. This variety of regulations has not hampered the United States in attracting global capital and provides ...