Corporate Governance Matters 4th Edition

The Definitive Guide to High-Performance Corporate Governance

Fully updated to reflect the latest research, trends, and regulations, Corporate Governance Matters, Fourth Edition, is the definitive resource for anyone seeking to improve corporate governance practices--from directors and institutional investors to policymakers and researchers. This edition offers comprehensive, objective insights grounded in rigorous analysis and real-world examples, covering new discussions on ESG ratings, stakeholder interests, CEO behavior, and artificial intelligence.

David Larcker and Brian Tayan examine today''s most pressing governance challenges, including board effectiveness, shareholder activism, organizational risk, and systemic breakdowns. Their empirical, non-ideological approach helps readers understand the impact of governance structures and processes on organizational performance, equipping them to make informed decisions in an increasingly complex environment.

Extensively revised coverage of:

• International corporate governance
• Compensation, equity ownership, incentives, and the labor market for CEOs
• Optimal board structure, tradeoffs, and consequences
• Governance, organizational strategy, business models, and risk management
• Succession planning
• Alternative corporate governance structures, including family controlled businesses, nonprofits, private equity, and venture capital
• Financial reporting and external audit
• The market for corporate control
• Roles of institutional and activist shareholders
• Governance ratings, and more

Features:

• Objectively and fully addresses every component of governance, with no axe to grind: explains what''s known and what isn''t, helping leaders make better choices in the face of uncertainty
• Brings together new academic research, updated examples and statistics, and a complete decision-making framework
• Includes expanded discussions of environmental and social issues in governance, board effectiveness, CEO succession and compensation, cyber risk, and shareholder activism

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Acknowledgments     xv

About the Authors     xvii

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       16

Chapter 2. International Corporate Governance       21

Capital Market Efficiency       21

Legal Tradition      24

Accounting Standards       25

Enforcement of Regulations      27

Societal and Cultural Values      28

Individual National Governance Structures       30

Endnotes       46

Interlude      52

Chapter 3. Board of Directors: Duties and Liability      53

Board Responsibilities      53

Board Independence     54

The Operations of the Board       55

Duration of Director Terms      63

Director Elections       63

Removal of Directors      66

Legal Obligations of Directors      66

Endnotes       78

Chapter 4. Board of Directors: Selection, Compensation, and Removal      83

Market for Directors