Corruption In Corporate America / Edition 2

Preface     ix
Introduction     1
The Context     1
Can Free Market Capitalism and Conscience Coexist?     2
Are Self-Interest and the Profit Motive Necessarily in Conflict With the Moral Claims of Conscience?     3
Welfare Capitalism: Capitalism With a Conscience     4
Welfare Capitalism and Checks and Balances at Work     6
Management     9
Management as the Repository of Organizational Power in Public Corporations     9
The Separation of Shareholder Ownership and Management Control: The Relocation of Power     11
The Centralization of Power in the Imperial Executive     13
Power and the Self-Perception of the Imperial CEO     16
B-School Education and Business Behavior     17
Are Shareholder Interests and Management Incentives Aligned Through Performance-Based Compensation Plans?     20
The Impact of the Sarbanes-Oxley Act     25
What is the CEO Required to Know: The Cendant Case     33
The Board of Directors     37
Who Holds the Power?     37
Clouding the Picture: Majority Control     40
Board Composition: Impact of Sarbanes-Oxley     46
Board Structure: Impact of Sarbanes-Oxley     49
The Director's Job:Then and Now     52
Examples of External Pressure: NYSE, Disney, and MBNA     57
The Accountants     67
The Nature of the Profession     67
The Financial Accounting Standards Board     70
The Importance of Estimation     72
The Auditing-Consulting Conflict     74
Would Disclosure Ease the Problem?     76
The Impact of Sarbanes-Oxley     77
International Accounting Standards     82
The Lawyers     85
The Concept of Law     85
The Code of Conduct     86
Confidentiality, Fraud, Disclosure, and Sarbanes-Oxley     89
Conflicts of Interest and Disclosure     92
Independence From External Power     94
Zeal and the Adversarial Nature of the Judicial System     95
The Class Action Suit     96
The Opinion Letter     98
Investment Bankers, Financial Analysts, and Institutional Investors     101
Investment Bankers     101
The Financial Analysts     106
Institutional Investors     109
The Impact of Sarbanes-Oxley     115
The Regulators     119
The Regulatory Objective     119
The Regulatory Structure     119
The SEC and the PCAOB (Also Fannie Mae and Freddie Mac)     121
The States' Attorney Generals and Regulatory Agencies     135
Plea Bargaining     142
The Securities Exchanges     145
International and National Exchange Consolidations     151
Professional Associations     153
Warning! Regulation is not a Final Solution: The Refco Case     156
Protecting the Public Interest     161
Behavior Modification     161
Enhancement of Shareholder Influence Over Corporate Directors     162
Improvement of Regulatory Consistency and Enforcement of the Law     163
Reduction and Containment of the Power of Political Pressure by Special Interests     164
Revival of a Sense of Individual Responsibility     165
Strengthening the Ethical Component in B-School Education     166
The Danger of Over-Regulation     167
Speaking to Power     169
In Defense of Sarbanes-Oxley   Paul Volcker   Arthur Levitt, Jr.     171
To Save New York, Learn From London   Charles E. Schumer   Michael R. Bloomberg     175
Threats to Sarbanes-Oxley: The Outlook   Abraham L. Gitlow     179
An Omnibus Look at Sarbanes-Oxley     179
Costliness of Sarbanes-Oxley     197
Modifying the Impact of Sarbanes-Oxley     201
Protecting the Public Interest: The Defenders of Sarbanes-Oxley     206
Index     211
About the Author     231