Corporate Governance and Accountability

Corporate Governance and Accountability, 2nd Edition is written to provide readers with an up-to-date summary of both theory and practice in the area. The new edition incorporates the most recent events in worldwide corporate governance, as well as a summary of the most recent academic and professional literature.

The book also brings together issues of financial performance, boardroom mechanics, the role of institutional shareholders, and corporate social responsibility into an international appraisal of current corporate governance theory and practice.

Preface. Acknowledgements.

Introduction.

Part I Corporate governance: frameworks and mechanisms.

1 Defining corporate governance. Aim and objectives. Introduction. What is corporate governance? Theoretical frameworks. Agency theory. Transaction cost theory. Transaction cost theory versus agency theory. Stakeholder theory. Stakeholder versus agency theory. Chapter summary. Questions for reflection and discussion.

2 Corporate governance failures. Aim and objectives. Introduction. The collapse of Enron. Laying the foundations. Glittering success. Early worries. Signs of distress. The Fall... and fall... of Enron. Creative accounting at Enron and its impact on the accounting profession. The aftermath. The Trial and the Human Dimension. A reflection on the corporate governance problems in Enron. The 'European Enron': Parmalat. Corporate governance failure in Parmalat. Chapter summary. Questions for reflection and discussion.

3 Corporate governance reform in the UK. Aim and objectives. Introduction. The Cadbury Report 1992. The Greenbury Report 1995. The Hampel Report 1998. The Turnbull Report 1999. The Higgs Report 2003. The Tyson Report 2003. The Smith Report 2003. Redraft of the Combined Code 2003. Corporate governance: A practical guide. Pension scheme governance' fit for the 21st century: A discussion paper for the National Association of Pension Funds (NAPF). Internal control: Revised guidance for directors on the Combined Code. Consultation on further revision of the Combined Code. Comply or explain. Applying the codes of practice to small companies. Ranking corporate governance initiatives. Why is good corporate governance important? Corporate governance and corporate performance. A risk perspective on corporate governance. Corporate governance ratings. Chapter summary. Questions for reflection and discussion.

4 The role of boards in corporate governance. Aim and objectives. Introduction: Enhancing board effectiveness. Unitary and two-tier board structures. Splitting the role of chairman and chief executive. Research into split roles. The role of non-executive directors in corporate governance. Research into the role of non-executive directors. Executive remuneration. Research into executive remuneration. Voting on directors’ remuneration. Directors’ training. A sympathetic viewpoint. Other factors contributing to board effectiveness. Alternative models for enhancing board effectiveness. Brave new boardrooms? Chapter summary. Questions for reflection and discussion.

5 The role of institutional investors in corporate governance. Aim and objectives. Introduction. The transformation of UK institutional ownership. A complex web of ownership. Conflict and pension fund trustees. The growth of institutional investor activism. Institutional investor voting. Reviewing the impediments to voting shares. Research into voting by institutional investors. Institutional investors: Engagement and dialogue. Research into engagement with institutional investors. Factors affecting shareholder activism. Shareholder activism and financial performance. Chapter summary. Questions for reflection and discussion.

6 The role of transparency in corporate governance. Aim and objectives. Introduction. Disclosure and corporate governance. Research into disclosure and corporate governance. Developments in governance reporting. Internal control and corporate governance. The revised guidance on internal control. Risk disclosure and corporate governance. The revised guidelines and corporate risk disclosure. Sarbanes-Oxley and internal control. The Operating and Financial Review fiasco. The role of audit in corporate governance. Auditor independence. Research into the effectiveness of the audit function. Chapter summary. Questions for reflection and discussion. Part II Global corporate governance.

7 An introduction to corporate governance systems worldwide. Aim and objectives. Introduction. Categorizing corporate governance: the Cinderalla problem. Insider-dominated systems. Outsider-dominated systems. Research into corporate governance systems worldwide. Global convergence in corporate governance. The outcome of corporate governance convergence. Country studies. Chapter summary. Questions for reflection and discussion.

8 A reference dictionary of corporate governance systems. Aim and objectives. Argentina. Australia. Bahrain. Belgium. Brazil. Canada. Chile. China. The Czech Republic. Denmark. Finland. France. Germany. Greece. Hong Kong. Hungary. Iceland. India. Indonesia. Italy. Japan. Jordan. Malaysia. The Netherlands. Nigeria. Oman. Poland. Portugal. Russia. Saudi Arabia. South Africa. South Korea. Sweden. Taiwan. Thailand. United States. Chapter summary. Questions for reflection and discussion. Part III Broadening the corporate governance agenda.

9 Discharging a broader corporate accountability. Aim and objectives. Introduction. Early roots of corporate social responsibility in the UK. Friedman and corporate social responsibility. Does corporate social responsibility improve financial performance? Corporate environmental reporting. Sustainability and a stakeholder perspective. Sustainability reporting. Illustrations of recent social, environmental and sustainability reporting. Verification of social, environmental and sustainability reporting. Stakeholder engagement. Chapter summary. Questions for reflection and discussion.

10 Environmental, social and governance considerations in institutional investment. Aim and objectives. Introduction. Terminology and definitions. From SEE to ESG. Some recent statistics on socially responsible investment. Socially responsible investment strategies. The financial performance of socially responsible investment funds. The drivers of socially responsible investment. A growing demand for social, ethical and environmental disclosure. Private social and environmental reporting: Institutional investor engagement on environmental, social and governance issues. Pension fund trustees and socially responsible investment. Socially responsible investment in an international context. Chapter summary. Questions for reflection and discussion.

11 Future directions for corporate governance and accountability. Appendix The Combined Code on Corporate Governance (July 2003).

References. Index.