Archive for April, 2009

Lessons Learned 9: For the Public Good: Pro Bono Work of Private Sector Advisors Advances Corporate Governance Initiatives

by the Global Corporate Governance Forum.

1.4B8C (1)To advance corporate governance in emerging market and developing countries, the Global Corporate Governance Forum mobilizes its unique and extensive network of business leaders, the Private Sector Advisory Group (PSAG). PSAG members have donated their time to countries by providing expertise, conducting a peer view, monitoring and evaluating performance. The value of PSAG members’ pro bono work exceeds an estimated one-million US dollars for fiscal 2009…

To download the file click here.

Corporate governance and the crisis

Video for OECD by Marcello Bianchi, April 27, 2009.

The financial crisis has revealed severe shortcomings in corporate governance. Marcello Bianchi, Chair of the OECD Committee on Corporate Governance talks about the lessons learned and the challenges ahead.

Boardrooms: Cultural Fiat at Your Service

by Jeffrey M. Cunningham for the Directorship Boardroom Intelligence, April 24, 2009.

I don’t argue that there has not been excess, and I don’t blame those who held their nose and allowed the government to intervene, and now call out for the pillars of activist corporate governance to be implemented.

But our culture demands – and our approach assures – that solving the executive pay dilemma is not likely to be easy, simple, or resolved in the short run. And there will be much gnashing of teeth and claw in the boardroom over executives who feel the rules may not apply to them – justifiably in some cases – versus board directors who will want to avoid any indication of weakness in enforcing a cultural fiat from on high.

And some company CEOs will have sterling performances and say they deserve more while others will be less outstanding but say they have to work harder or hire smarter folks at a higher price…

Continue reading by cliking here.

The importance of Corporate Governance by Jordi Canals from IESE

Video for IESE by Jordi Canals, April 21, 2009.

Jordi Canals, professor and dean of IESE Business School, explains how to create corporate governance that can better guarantee a company’s success. Canals says it is not enough to simply reinforce the legal, financial and regulatory measures that govern a company’s administrators. Rather, a company must revisit all of its policies, systems, institutions, criteria and processes for decision making, and adopt a much more integrated approach, which will allow the company not just to survive as an organization but to develop over the long term.
To watch the video click here.

What Matters in Corporate Governance?

by Lucian A. BebchukAlma CohenAllen Ferrell for Harvard Law School, at SSRN, April 17, 2009.

Abstract:

We investigate which provisions, among a set of twenty-four governance provisions followed by the Investor Responsibility Research Center (IRRC), are correlated with firm value and stockholder returns. Based on this analysis, we put forward an entrenchment index based on six provisions – four constitutional provisions that prevent a majority of shareholders from having their way (staggered boards, limits to shareholder bylaw amendments, supermajority requirements for mergers, and supermajority requirements for charter amendments), and two takeover readiness provisions that boards put in place to be ready for a hostile takeover (poison pills and golden parachutes). We find that increases in the level of this index are monotonically associated with economically significant reductions in firm valuation, as measured by Tobin’s Q. We present suggestive evidence that the entrenching provisions cause lower firm valuation. We also find that firms with higher levels of the entrenchment index were associated with large negative abnormal returns during the 1990-2003 period. Moreover, examining all sub-periods of two or more years within this period, we find that a strategy of buying low entrenchment firms and selling short high entrenchment firms out-performs the market in most such periods and does not under-perform the market even in a single sub-period. Finally, we find that the provisions in our entrenchment index fully drive the correlation, identified by prior work, that the IRRC provisions in the aggregate have with reduced firm value and lower stock returns during the 1990s; we do not find any evidence that the other eighteen IRRC provisions are negatively correlated with either firm value or stock returns during the 1990-2003 period…

To download the Paper click here.

Global plan for recovery and reform

by The London Summit, April 2 2009.

The official communique issued at the close of the G20 London Summit.

Read the statement

1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.

2. We face the greatest challenge to the world economy in modern times; a crisis  which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution…(read the complete statement)


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(in Portuguese) A weekly chronicle about shareholders' rights & duties, activism and capital markets regulation, by Renato Chaves.
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