In their latest book, corporate governance experts assess which governance practices really work.
Corporate misdeeds seem to grab headlines every day and, if you look behind the scenes, what most of these offenses have in common is a breakdown in corporate governance. Not surprisingly, Professor David Larcker at Stanford Graduate School of Business says there is good reason for us to be worried about how corporate governance is being practiced today.
Research shows that approximately 8 percent of publicly traded companies each year have to restate their financial results due to previous manipulation or error, and approximately 10 percent of Chapter 11 bankruptcy cases involve allegations of fraud. And these are just the egregious cases we know about.
In their latest book, “A Real Look at Real World Corporate Governance,” Professor Larcker and his coauthor Brian Tayan come to grips with the messy, real-world state of corporate governance, defined as the processes and procedures that are supposed to ensure company management acts in the best interests of shareholders. As they demonstrate, reality is often quite different...
What really matters, they say, is the quality and engagement of the board, the tone set by management, compensation design, and a dedication to internal talent development and succession planning.