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Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences - 1st chapter (2011 pb.)

Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences - 1st chapter (2011 pb.)

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Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences
By David Larcker and Brian Tayan, FT Press-Pearson Prentice Hall, 2011

Why Does Corporate Governance Really Matter? New Book from Stanford Graduate School of Business Showcases Research into How Boards Can Govern Better
May 19th, 2011

May 19, 2011 01:47 PM Eastern Daylight Time
Corporate Governance Matters by Professor David Larcker and Brian Tayan

STANFORD, Calif.–(BUSINESS WIRE)–“The debate on the role of boards in the wake of the financial crisis has created a lot of hype and rhetoric about corporate governance,” says David Larcker, who is James Irvin Miller Professor of Accounting and Director of the Corporate Governance Research Program at the Stanford Graduate School of Business and coauthor with Brian Tayan of the new book Corporate Governance Matters (FT Press). According to Larcker, many so-called experts are heavy on opinions about governance, but light on the facts.

“The fight for ‘say on pay’ and proxy access has gotten a lot of ink – but it is unclear whether it will actually create shareholder value.”
“The FDA requires research on drug outcomes before approving a pharmaceutical,” he says. “Shouldn’t experts that prescribe ‘cures for bad governance’ be subject to a similar standard of review?”

In their book, Larcker and Tayan, a researcher at Stanford GSB, challenge the conventional wisdom of the many books, reports, and recommendations of blue-ribbon panels on what constitutes “good” governance. The authors researched hundreds of companies and interviewed many board directors to uncover the real-life consequences of corporate governance practices – from director independence to designing appropriate executive pay packages.

“A lot of people want to measure what’s measurable – we wanted to measure what’s informative,” says Tayan. “For example, certain lightning-rod issues, such as ‘excessive’ risk taking and CEO compensation, get a lot of attention from outside observers, while important issues that are considerably more difficult to assess – such as corporate strategy and succession planning – tend to get the short shrift.”

Trends Getting in the Way of Good Governance

“Our research shows that many emerging developments that were intended to improve governance – purportedly to avert the kind of financial disaster we just experienced – just don’t hold water,” Larcker explains. These include:

Compliance drowning out strategy – “A check-the-box approach is not what we need from directors. We need instead their best thinking and ability to manage risk appropriately for corporate growth.”
“Federalization of corporate governance” – “As corporate governance becomes increasingly, and probably inexorably, ‘federalized’ through regulations such as Dodd-Frank, there is a real question as to whether these laws make boards govern better,” he says. “We’re still debating whether the 10-year-old Sarbanes Oxley was good for the economy.”
“Shareholder democracy” movement – “The fight for ‘say on pay’ and proxy access has gotten a lot of ink – but it is unclear whether it will actually create shareholder value.”
Rise of proxy advisory firms – “Proxy advisory firms exhibit substantial influence over the proxy voting process. What is the evidence that their recommendations lead to the kinds of positive outcomes that stakeholders really care about?”
“We wrote our book for thinkers – for practitioners who want to see how important governance issues play out in the real world,” says Tayan.

“By integrating several different approaches to the topic – both business and legal – we have created a practical framework for directors that will help them make decisions that lead to organizational success.”

To speak with the authors, contact Davia Temin or Suzanne Oaks at 212-588-8788 or news@teminandco.com.

For information on Corporate Governance Research Program: http://www.gsb.stanford.edu/cgrp/about/

Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences
By David Larcker and Brian Tayan, FT Press-Pearson Prentice Hall, 2011

Why Does Corporate Governance Really Matter? New Book from Stanford Graduate School of Business Showcases Research into How Boards Can Govern Better
May 19th, 2011

May 19, 2011 01:47 PM Eastern Daylight Time
Corporate Governance Matters by Professor David Larcker and Brian Tayan

STANFORD, Calif.–(BUSINESS WIRE)–“The debate on the role of boards in the wake of the financial crisis has created a lot of hype and rhetoric about corporate governance,” says David Larcker, who is James Irvin Miller Professor of Accounting and Director of the Corporate Governance Research Program at the Stanford Graduate School of Business and coauthor with Brian Tayan of the new book Corporate Governance Matters (FT Press). According to Larcker, many so-called experts are heavy on opinions about governance, but light on the facts.

“The fight for ‘say on pay’ and proxy access has gotten a lot of ink – but it is unclear whether it will actually create shareholder value.”
“The FDA requires research on drug outcomes before approving a pharmaceutical,” he says. “Shouldn’t experts that prescribe ‘cures for bad governance’ be subject to a similar standard of review?”

In their book, Larcker and Tayan, a researcher at Stanford GSB, challenge the conventional wisdom of the many books, reports, and recommendations of blue-ribbon panels on what constitutes “good” governance. The authors researched hundreds of companies and interviewed many board directors to uncover the real-life consequences of corporate governance practices – from director independence to designing appropriate executive pay packages.

“A lot of people want to measure what’s measurable – we wanted to measure what’s informative,” says Tayan. “For example, certain lightning-rod issues, such as ‘excessive’ risk taking and CEO compensation, get a lot of attention from outside observers, while important issues that are considerably more difficult to assess – such as corporate strategy and succession planning – tend to get the short shrift.”

Trends Getting in the Way of Good Governance

“Our research shows that many emerging developments that were intended to improve governance – purportedly to avert the kind of financial disaster we just experienced – just don’t hold water,” Larcker explains. These include:

Compliance drowning out strategy – “A check-the-box approach is not what we need from directors. We need instead their best thinking and ability to manage risk appropriately for corporate growth.”
“Federalization of corporate governance” – “As corporate governance becomes increasingly, and probably inexorably, ‘federalized’ through regulations such as Dodd-Frank, there is a real question as to whether these laws make boards govern better,” he says. “We’re still debating whether the 10-year-old Sarbanes Oxley was good for the economy.”
“Shareholder democracy” movement – “The fight for ‘say on pay’ and proxy access has gotten a lot of ink – but it is unclear whether it will actually create shareholder value.”
Rise of proxy advisory firms – “Proxy advisory firms exhibit substantial influence over the proxy voting process. What is the evidence that their recommendations lead to the kinds of positive outcomes that stakeholders really care about?”
“We wrote our book for thinkers – for practitioners who want to see how important governance issues play out in the real world,” says Tayan.

“By integrating several different approaches to the topic – both business and legal – we have created a practical framework for directors that will help them make decisions that lead to organizational success.”

To speak with the authors, contact Davia Temin or Suzanne Oaks at 212-588-8788 or news@teminandco.com.

For information on Corporate Governance Research Program: http://www.gsb.stanford.edu/cgrp/about/

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12/16/2013

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Praise for 
Corporate Governance Matters
“No board of directors ought to be without Larcker and Tayan’s
CorporateGovernance Matters
. In today’s increasingly regulated environment, thiscomprehensive book is not only an important reference manual, but also aninteresting read and a valuable roadmap.”
 Joel Peterson
, Chairman, JetBlue Airways, and former Lead Director, Franklin Covey “An outstanding work of unique breadth and depth providing practical advicesupported by detailed research. This should be required reading for all boardmembers and everyone who serves as an advisor to boards.”
 Alan Crain, Jr.
, Senior Vice President and General Counsel, Baker Hughes Incorporated
Corporate Governance Matters
is by far and away the most useful, fact-based book on corporate governance available. It is essential reading for all current andprospective board members, anyone interested in how boards work, and forstudents of corporate governance. Its chapters on executive and equity pay, inparticular, shine a bright light on a topic too often discussed without substance and context.”
Mark H. Edwards
, Chairman and CEO, Compensia“The complexity of corporate governance often lies in its propensity to becomehighly subjective. David and Brian’s objective and unbiased approach to thisimportant subject is very refreshing. This book reflects the meticulous and thoroughmanner in which the authors have approached corporate governance systems. They have an eye for detail and present every statement and observation with a firmfactual foundation. Extensively researched, with highly relevant insights, this bookserves as an ideal and practical reference for corporate executives and students of business administration.”
Narayana N.R. Murthy 
, Infosys Technologies Limited
Corporate Governance Matters
should be on the reading list for any public orprivate company director. The authors present comprehensive coverage of currenttopics using both research and real-world examples to drive home the issues anduncover the best practices. I found their survey of foreign practices and culturaldifferences to be particularly fascinating and helpful as I work with one of my companies on an offshore partnership. Fascinating, engaging, and full of usefulinformation—a must-read!”
Heidi Roizen
, Founder, CEO and Chief Lyrical Officer, Skinny Songs
 
“A tour de force. David Larcker and Brian Tayan have written an easy-to-read,crucial-to-know overview of corporate governance today. Powerfully blending real- world cases with the newest scientific research,
Corporate Governance Matters
identifies fundamental governance concerns that every board and shareholderneeds to know about. The book also provides a valuable, real-world discussion of succession planning and the labor market for executives. If you really want to know about corporate governance (as opposed to following media pundits and governancerating firms), you must read this book!”
Stephen A. Miles
, Vice Chairman, Heidrick & Struggles“Larcker and Tayan have written a first-rate book on corporate governance. Their analysis is unique in its logic, balance, and insistence on rigorous empiricalevidence. This book should be required reading for directors, shareholders, andlegislators.”
Steven N. Kaplan
, Neubauer Family Professor of Entrepreneurship andFinance, University of Chicago Graduate School of Business“David Larcker has long been recognized by practitioners and researchers alike forhis exceptional empirical analysis of key factors in corporate governance. With thisnew book, Larcker builds on what he has taught us through his research over the years and masterfully weaves together the range of key issues that investors,managements, and boards must grapple with in order to achieve the corporategovernance balance required for optimal outcomes today.In plain language and with examples that bring to life the key points that every investor or board member should care about and that every student of corporategovernance would want to understand, Larcker and Tayan walk us step by stepthrough the most important factors in building and protecting long-term sustainable value in public companies. Recognizing, as good research has shown over the years,that one size does not fit all, this book provides thought-provoking questions andoffers insights based on experience and history to help guide readers to their ownconclusions about how to apply its lessons to the specific situations they may face intheir own companies.
Corporate Governance Matters
is sure to become requiredreading for director education and an essential desk reference for all corporategovernance practitioners.”
 Abe M. Friedman
, Managing Director, Global Head of Corporate Governance & Responsible Investment, BlackRock“Through a careful and comprehensive examination of organizational considerations,choices, and consequences, David Larcker and Brian Tayan have produced a valuableresource for anyone with an interest in the functions of corporate governance, or whose goal is to enhance their organization’s governance system.”
Cindy Fornelli
, Executive Director, Center for Audit Quality 

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