When Shareholder Democracy Is Sham Democracy: Directors in 41 publicly traded companies remained in their posts despite "resounding votes of no confidence" from their shareholders, prompting New York City’s comptroller, John Liu to observe that the right to elect directors, "one of the few rights afforded shareholders is illusory," and “Shareowners need accountable directors who will ensure the company isn’t being run for the benefit of insiders at our expense.” Meanwhile, studies seem to back Liu up: "...firms with stronger governance exhibit a higher propensity to pay dividends and, for dividend payers, pay larger dividends." [more inside]
Capitalism for the Long TermManaging Director of McKinsey & Company Dominic Barton sums up his prescriptions for the future of corporate governance for the Harvard Business Review. [more inside]
We know companies with a larger percentage of women directors show a higher incidence of "positive events"[ .pdf ], while "Women Matter" [ .pdf ], a 2007 McKinsey study found that adding Women to a company's board of directors improved ROE, EBIT and share price growth. A business case for including women on the board. [more inside]
The separation of the ownership of a business from its management is one of the defining characteristics of the modern capitalist system. But ongoing failures of corporate governance, particularly in banking, have called into question these structures. Is there a better way? Secretive UK private bank C. Hoare & Co. has a solution that works for those customers it chooses to accept. [more inside]
Forum: The Pros and Cons of Director Liability. [more inside]
The Fall of Fannie Mae This is not your ordinary accounting fraud. Yes, there's the matter of $9 billion in overstated earnings. But the fight over Fannie is a nasty political showdown where everyone has his own agenda. And it's not over yet.