Ever since Adam Smith published The Wealth of Nations in 1776, observers have bemoaned boards of directors as being ineffective as both monitors and advisors of management. Because a CEO often effectively controls the director selection process, he will tend to choose directors who are unlikely to oppose him, and who are unlikely to provide the diverse perspectives necessary to maximize firm value. Institutional investors often are critical of CEOs’ influence over boards and have made efforts to help companies improve their governance. Nonetheless, boards remain highly imperfect.

“Go find your passion,’’ Henry directed his children when they reached their late teens and early twenties. “Find your interests outside our family business and pursue them.’’ As inspiring as those words may have been, Henry, the patriarch of a successful automotive parts business, wasn’t simply freeing his children to follow their dreams. He was requiring it.

Corporate directors and executives alike recognize that today’s pace of change continues to accelerate and that firms need to innovate to stay ahead. But are boards doing enough to support innovation, as they should? We conducted a survey of over 5,000 board members from around the world to find out...

When asked why companies don't talk more about the long term, CEOs ... risks and opportunities, corporate governance , corporate purpose, human ...

However, Germany relies on a specific corporate governance model which is not ... Corporate governance is just one part of a “package” of economic ...

... GE's long and steep decline, where was the company's board of directors ? ... GE's board had another major structural defect: It lacked a finance ...

Richard (not his real name) graduated from college on a Friday. Three days later he would start his first day on the job in his family business. The choice was not one that he gave much thought to.

The stigma of asking for or being assigned an executive coach is vanishing quickly. The growth of the industry tells us so. In the U.S. alone, $1 billion was spent on business, personal and relationship coaches last year, according to IbisWorld, up about 20% from five years earlier.

The board of directors of a public company has a long list of oversight responsibilities, but it is not always the case that directors receive the ...

To estimate the effect of a CEO's social network's diversity on their firm's value, we used ordinary least square regression models to control for other variables that could potentially change firm value, such as firm size, profitability, financial leverage, investment intensity, and corporate governance .

These techniques are rapidly changing many industries — could they also improve corporate governance ? To explore that question, we conducted a study of how machine learning might be used to select board directors, and how the selected directors might differ from those selected by management.

Most board chairs are experienced leaders. Half the chairs of the S&P 500 double as their companies’ chief executives, and the vast majority of the rest are former CEOs. But the close association of the two positions creates problems. It’s difficult for a board led by the CEO to serve as a check on that CEO—which is precisely why, after the corporate scandals of the 1990s and early 2000s, more companies began separating the roles. However, that division can create another problem: When the chair is not the CEO, there’s a real danger that he or ...

One defining feature of 2017 has been seeing corporate directors and officers being held personally responsible for illegal behavior at their companies. For example, after Wells Fargo Bank paid more than $300 million in penalties for creating over 3 million sham customer accounts, Judge Jon Tigar of the U.S. District Court in San Francisco refused to dismiss claims against the fifteen members of the Wells Fargo board. And Oliver Schmidt, the highest ranking Volkswagen officer residing in the United States, was sentenced to seven years in prison and ordered to pay $400,000 for his role in the VW ...

The public corporation is typically bedeviled by the gap between managers’ and shareholders’ interests. Over the years, governance has attempted to close that gap by aligning incentives with measures of performance. These attempts have often failed. But where they have succeeded, they have left public corporations increasingly swayed by short-term results (which are easy to measure) at the expense of future success.

Mary Barra, Meg Whitman, Indra Nooyi: These are just three of the women who have successfully broken through the notorious “glass ceiling” to become CEOs of large public firms. Although women are still underrepresented at the top of corporations, there is growing interest in understanding whether ...

With a typical CEO of an S&P 500 company earning $11 million in total ... is significantly tighter and more competitive than governance experts might ...

Boards of directors play two roles. They must protect value by helping companies avoid unnecessary risks, and they must build value by ensuring that companies change quickly enough to address emerging competitive threats, evolving customer preferences, and disruptive technologies.

At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of intensifying shareholder intolerance of mediocre or poor corporate performance, the ceremonial boards of the past are being replaced by active boards that are more demanding of managers and more intrusive in their affairs.

Conventional wisdom suggests that the most charismatic leaders are also the best leaders. Charismatic leaders have, for instance, the ability to inspire otherstoward higher levels of performance and to instill deep levels of commitment, trust, and satisfaction. As a result, they are generally perceived by their subordinates to be more effective, compared with less charismatic leaders.

Remarkably, Prime Minister Shinzo Abe has embraced shareholder activism, in a bid to encourage the adoption of his corporate governance reforms, ...

At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of intensifying shareholder intolerance of mediocre or poor corporate performance, the ceremonial boards of the past are being replaced by active boards that are more demanding of managers and more intrusive in their affairs.

In 2013 an activist investor criticized the board at ConMed for a “culture of nepotism, patronage, and dystopian corporate governance.” Director Stephen Mandia, who had served on the board for 12 years, departed shortly after. Two other directors stayed on the board but picked up additional board seats at other firms within the year. When Baker Hughes and Halliburton were both downgraded by equity analysts following an Obama administration oil drilling ban in 2010, several of their long-serving directors decamped to take up seats at other firms. What these examples suggest is that directors will leave firms that experience negative ...

The New York Stock Exchange requires that the boards of all publicly traded corporations conduct a self-evaluation at least annually to determine whether they are functioning effectively. The purpose of the exercise is to ensure that boards are staffed and led appropriately, that board members are effective in fulfilling their obligations, and that reliable processes are in place to satisfy important oversight requirements.

The chief executive role is a tough one to fill. From 2000 to 2013, about a quarter of the CEO departures in the Fortune 500 were involuntary, according to the Conference Board. The fallout from these dismissals can be staggering: Forced turnover at the top costs shareholders an estimated $112 billion in lost market value annually, a 2014 PwC study of the world’s 2,500 largest companies showed.