Infectious Greed: Restoring Confidence in Americas Companies - page 62


Summary

We've only recently started paying attention to the activities of the board of directors. It appears that there is little regulation with regard to its composition, structure, and obligations. Also, there are many potential problems with the way many corporations' boards are set up. For example, it seems that directors lack the independence, the vested interest, the time, and sometimes the expertise to carry out their fiduciary obligations to shareholders. Enron's board is a telling example. Does this mean that there is something wrong with the system? Many suggestions regarding board regulation have been proposed. Will they fix the problem? We will discuss this further in Chapters 12 and 13.


Endnotes

  1. Ralph Nader, Mark Green, and Joel Seligman, Taming the Corporate Giant (New York: W. W. Norton & Company, 1976), p. 95.

  1. Katrina Brooker, "Trouble in the Boardroom," Fortune , May 13, 2002, pp. 113 “116.

  1. Ibid.

  1. These statistics are based on averages reported in the 28th Annual Board of Directors Study, Korn/Ferry International, 2001, http://www.kornferry.com/Library/Process.asp?P=PUB_001.

  1. For example, the Delaware General Corporate Law 141.

  1. Nasser Arshadi and Thomas H. Eyssell, The Law and Finance of Corporate Insider Trading (New York: Kluwer Academic Publishers, 1993), p. 7.

  1. "M&A Activity Report," Mergerstat, LP, November 2002, www.mergerstat.com/new/free_reports_m_and_a_activity.asp.

  1. 28th Annual Board of Directors Study, Korn/Ferry International, 2001, http://www.kornferry.com/Library/Process.asp?P=PUB_001.

  1. Korn Ferry International recommendations, www.kornferry.com.

  1. Ralph Nader, Mark Green, and Joel Seligman, Taming the Corporate Giant (New York: W. W. Norton & Company, 1976).

  1. 28th Annual Board of Directors Study, Korn/Ferry International, 2001, http://www.kornferry.com/Library/Process.asp?P=PUB_001.

  1. This quote is found in Robert Monk and Nell Minow, Power and Accountability , 2001, http://www.thecorporatelibrary.com/power/.

  1. 28th Annual Board of Directors Study, Korn/Ferry International, 2001, http://www.kornferry.com/Library/Process.asp?P=PUB_001.

  1. Ibid.

  1. John A. Byrne, "The Best and Worst Boards," BusinessWeek , December 8, 1997, pp. 90 “98.

  1. Bruce Orwall, "Disney Board Braces for Impact of New Independence Rules," Wall Street Journal , August 12, 2002, p. B1.

  1. John A. Byrne, "The Best and Worst Boards," BusinessWeek , December 8, 1997, pp. 90 “98.

  1. Ibid.

  1. John A. Byrne, "Directors in the Hot Seat," BusinessWeek , December 8, 1997, pp. 100 “104.

  1. Ibid.

  1. John A. Byrne, "The Best and Worst Boards," BusinessWeek , December 8, 1997, pp. 90 “98.

  1. John A. Byrne, "The Best and Worst Corporate Boards," BusinessWeek , January 24, 2000, pp. 142 “152.

  1. Jerold B. Warner, Ross L.Watts, and Karen H. Wruck, "Stock Prices and Top Management Changes," Journal of Financial Economics 20 (1989): 461 “492; Michael S. Weisback, "Outside Directors and CEO Turnover," Journal of Financial Economics 20 (1988): 431 “460; Kenneth A. Borokhovich, Robert Parrino, and Teresa Trapani, "Outside Directors and CEO Selection," Journal of Financial and Quantitative Analysis 31, no. 3 (1996): 337 “355; and Kathleen A. Farrell and David A. Whidbee, "The Consequences of Forced CEO Succession for Outside Directors," Journal of Business 73, no. 4 (2000): 597 “627.

  1. Kathy Farrell and David Whidbee, "The Consequences of Forced CEO Succession for Outside Directors," Journal of Business 73 (2000): 597 “627.

  1. John A. Byrne, "Directors in the Hot Seat," BusinessWeek , December 8, 1997, pp. 100 “104.

  1. John A. Byrne, "The Best and Worst Boards," BusinessWeek , November 25, 1996, pp. 82 “91.

  1. James R. Booth and Daniel N. Deli, "On Executives of Financial Institutions as Outside Directors," Journal of Corporate Finance 5, no. 3 (1999): 227 “250.

  1. Jeff Huther, "An Empirical Test of the Effect of Board Size on Firm Efficiency," Economics Letters 54, no. 3 (1996): 259 “264; David Yermack, "Higher Market Valuation of Companies with a Small Board of Directors," Journal of Financial Economics 40, no. 2 (1996): 185 “211.

  1. "Tyco Cancels Vote on Expanding Board," Reuters Business Report , August 6, 2002, 9:32 a.m.

  1. "The Role of the Board of Directors in Enron's Collapse," U.S. Senate Report 107 “70, July 8, 2002.

  1. Ibid.

  1. John Byrne, "Commentary: No Excuses for Enron's Board," BusinessWeek , July 29, 2002, p. 50.

  1. Pete Yost, "Enron Board Knew of Financial Abuses, Senate Report Says," Seattle Times , July 7, 2002, p. A14.