Governance Model with Sole Focus on Shareholder Value Might Not Be the Optimal Way Forward

Interview with Dr. Franklin Allen, professor of finance and economics at the University of Pennsylvania’s Wharton School.

The most interesting piece on corporate governance I read recently was…

research paper on corporate governance and the performance of American banks during the financial crisis of 2007-2008. Among other intriguing propositions, the paper suggests that lack of proper corporate governance in the area of risk management may have contributed to the struggles of the financial services sector during this time. It looks at the evidence to understand the role shareholders played. And, in fact, there is some evidence that shareholders encouraged managers to take risks in a number of ways. It is an interesting finding, because it suggests that regulators should be exploring other interventions—they might need to take a rather different approach than what they are currently doing to curb bank risk-taking. For example, they might need to intervene into the executive compensation process more.

Right now, I am working on… (continue reading)

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