Corporate governance transparency
-
Upload
northamericanmgtsoc -
Category
Business
-
view
102 -
download
1
description
Transcript of Corporate governance transparency
![Page 1: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/1.jpg)
Corporate Governance & Transparency
Presented By: Patricia Abels & Joseph Martelli
![Page 2: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/2.jpg)
What is CEO Duality? ▪ When a CEO also serves as the Chairman of the Board of
Directors
▪ Splitting CEO duality is gaining acceptance within large US companies
▪ Corporate disclosure and transparency are heightened when the role of CEO and Chairman are split
▪ Prevalent topic due to the turbulence of the American economy
▪ 80% of large US corporations have governance policies that permit CEO duality, while large foreign corporations in Europe do not.
![Page 3: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/3.jpg)
Legislation ▪ Sarbanes-Oxley Act (SOX) –
Ø Regulates the financial activity and corporate governance of public corporations
Ø Securities and Exchange Commission (SEC) regulates corporate compliance with SOX
![Page 4: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/4.jpg)
Legislation ▪ Exchange Act –
Ø Amendment to the Securities Exchange Act of 1934 to forbid a dual CEO role (Release No. 34-48745)
Ø Requires board membership of listed public companies to be predominately composed of independent directors, not management
![Page 5: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/5.jpg)
Legislation ▪ Exchange Act –
Ø Amendment to Regulation S-K to enhance corporate governance and disclosure policies (Release No. 34-60280)
Ø Restricts CEOs from dually serving as Chairman of the Board unless companies can justify and disclose its reasoning
![Page 6: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/6.jpg)
Theory
▪ Agency Theory Ø Defines the relationship existing between a stockholder
(principal) and management (agent) Ø Assumes an agent will select the best option to enhance their
own personal benefit
![Page 7: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/7.jpg)
Theory
▪ Perspectives Ø Advocates and Agency theorists believe the CEO duality
position hinders firm performance Ø Proponents of duality believe one central authority figure
reduces confusion
![Page 8: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/8.jpg)
Methodology, Analysis, and Results
▪ This study seeks to reveal the degree to which CEO duality roles exist today in large US publicly traded corporations
▪ Analysis incorporated the top 500 revenue-generating firms for 2008 and 2010
▪ 432 companies remained on the Fortune 500 in 2010
▪ 86 companies appointed a new CEO
▪ Supplementary analysis focuses on the 86 new CEOs
![Page 9: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/9.jpg)
![Page 10: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/10.jpg)
![Page 11: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/11.jpg)
![Page 12: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/12.jpg)
![Page 13: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/13.jpg)
![Page 14: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/14.jpg)
Conclusion § A fiduciary duty exists with boards of directors to protect the interests of the shareholders § Dual CEOs have additional company insight and insiders have greater firm knowledge that can permit efficiency in decisions
§ Weak board independence can promote moral hazard
![Page 15: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/15.jpg)
Conclusion § Large US companies are changing governance structures
§ Splitting the duality role is becoming more widely accepted in order to increase corporate disclosure and transparency
![Page 16: Corporate governance transparency](https://reader033.fdocuments.in/reader033/viewer/2022042713/549cbf21b47959d4318b47fd/html5/thumbnails/16.jpg)
Corporate Governance & Transparency
Thank You for Attending
Patricia Abels & Joseph Martelli