The Recurrent Crisis in Corporate Governance

The Recurrent Crisis in Corporate Governance

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Overview

The Recurrent Crisis in Corporate Governance by Paul MacAvoy, Ira Millstein

Taking a close look at American corporate governance, the authors show what is missing in today's corporate governance, and support a case for activating the board of directors to put new controls on management and take responsibility for the result.

Product Details

ISBN-13: 9780804750868
Publisher: Stanford University Press
Publication date: 08/18/2004
Edition description: 1
Pages: 192
Product dimensions: 5.50(w) x 8.50(h) x 0.60(d)

About the Author

Paul W. MacAvoy is a Thomas F. and William J. Gilbane President Fellow in the Department of Economics at Brown University. Professor MacAvoy served on
President Ford's Council of Economic Advisors and on the board of directors of several corporations including Lafarge, American Cyanamid, Alumax,
Combustion Engineering and the Chase Manhattan Bank Corporation. He is the author of twenty books and numerous journal articles focusing on government regulation of the structure and conduct of the corporation. Ira M.
Millstein, Senior Partner, Weil, Gotshal & Manges LLP, has taught corporate governance, antitrust, and government regulation at New York University,
Harvard's Kennedy School of Government, and currently as a Visiting Professor at the Yale University School of Management. An Elected Fellow of the American Academy of Arts & Sciences, he has counseled over 50 public and philanthropic boards, including General Motors, CalPERS, Tyco, and The Nature Conservancy, and has published numerous articles on corporate governance.

Table of Contents

List of Figures and Tablesxi
List of Appendix Tablesxii
List of Abbreviationsxiii
Prefacexv
1Introduction and Summary1
2The Current Crisis7
3The Emergence and Development of the Governance Problem13
Conglomeration as an example of managerial self-interest15
Other sources of accelerated change23
The emergence of the full role of the board of directors31
Has the emergence of "new" governance, in terms of board diligence and focus, become observable?35
4The Ambivalent Results of Extant Research on the Impact of Strong Governance on Corporate Performance37
5A New Approach for Determining the Effect of Strong Governance on Corporate Performance49
Metrics for board independence and professionalism51
Metrics for performance53
Methodology59
Estimation and analysis of the governance/corporate performance relationship62
The calculation of economic value added64
Superior performance after a change in governance70
Conclusion71
6"Where Was the Board?" Share Price Collapse and the Governance Crisis of 2000-200273
The status quo in corporate governance in the 1990s75
Incremental change76
The collapse of Enron and the others85
The nine largest companies investigated for fraudulent financial reporting93
Where was the board of directors?96
A second look at management out of control100
7Proposals for Reform of Corporate Governance107
New expectations for improved performance in boards of directors115
Recommendations127
Appendix ATechnical Implementation Issues in the Analysis of EVA for CalPERS-rated Companies136
Appendix BDatabase of EVA Estimates143
References151
Index165

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