New Stanford Book: Corporate Governance Matters by Larcker-Tayan
New Stanford Book: Corporate Governance Matters by Larcker-Tayan
New Stanford Book: Corporate Governance Matters by Larcker-Tayan
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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 FDA requires research on drug outcomes before approving a “The fight for ‘say on
pharmaceutical,” he says. “Shouldn’t experts that prescribe ‘cures for bad
pay’ and proxy access
governance’ be subject to a similar standard of review?”
has gotten a lot of ink –
but it is unclear
In their book, Larcker and Tayan, a researcher at Stanford GSB, challenge the
whether it will actually
conventional wisdom of the many books, reports, and recommendations of blue-
ribbon panels on what constitutes “good” governance. The authors researched create shareholder
hundreds of companies and interviewed many board directors to uncover the real- value.”
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.”
“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.
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Why Does Corporate Governance Really Matter? New Book from Stanford Graduate Sch... Page 2 of 2
These include:
1. 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.”
3. “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.”
4. 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.
Contacts
http://www.businesswire.com/news/home/20110519006613/en/Corporate-Governance-Ma... 5/23/2011