Prof. Marc Goergen on Corporate Governance

COURSE DESCRIPTION This is a slightly different version of the course outline I published sometime ago and which can be found here. The focus here is more on young and entrepreneurial firms - including those from emerging markets - rather than more mature businesses.
Who Should Take this Course
Corporate governance is frequently reduced to compliance and box ticking. This course will show you that corporate governance is more than this and that it can be used proactively to create value.
This course is aimed at three different constituencies. First, it is aimed at budding entrepreneurs who want to know more about designing the governance of their ventures in view of ultimately going public. Second, it is also aimed at those who aspire to a career as a non-executive director. Finally, the course should also be of interest to investors and other parties interested in how corporate control, ownership and governance vary across the world.
Course Overview
This course aims to introduce you to re…

Starting with the 1992 Cadbury Report in the UK, the emphasis of most codes of best practice has been on ensuring a sufficient number of independent directors on corporate boards. Successive codes of best practice have then attempted to increase the number of independent directors even further. It is then no surprise that Spain's Iberdrola has won successive prizes for its corporate governance. Indeed, nine of Iberdrola's 14 members of its board of directors are independent directors with another three being external directors and the remaining two being executives.


So does having more independent directors on a board always mean better corporate governance? Well, not necessarily. First, the academic literature on the value consequences of board independence – with board independence typically measured by the percentage of independent directors on the board – has found little or no evidence of an effect of board independence on firm performance and value. Still, this literature…

This cross-country study argues that corporate social responsibility (CSR) has an internal as well as an external focus: although the internal aspect has been less carefully examined in the literature, ‘doing good’ for society necessarily involves treating employees properly. Focusing on this internal aspect of corporate social responsibility, we investigate how firm and country characteristics affect the likelihood of a firm having a CSR statement and how it impacts the way such firms treat their internal stakeholders and their staff. In particular, our paper examines employer-employee interdependence – how the existence of a CSR statement affects a firm’s investment in its staff and the downsizing of its workforce when required – according to types of firms and legal families.

The following research questions are addressed: read more

The published study is now available free of charge from here.

Theory as well as empirical studies suggest that voting at annual general shareholder meetings (AGMs) creates value. Indeed, voting gives shareholders a final say on major company decisions, such as appointments to the board of directors and the approval of takeover offers. It also enables shareholders to show their support the current management or to disagree with the latter. It is then somewhat surprising that, on average, voter turnout at AGMs is only about 60%. Still, the average voter turnout varies across the world with a minimum of 41% for New Zealand and a maximum of 100% for Cyprus. Moreover, the average approval rates for management-initiated proposals vary between 84% and 100%.

In a study with Peter Limbach and Simon Lesmeister, we propose the level of trust in others that prevails in a country has an effect on shareholder voting and explains differences in voting patterns across countries. The economics literature (see e.g. Zak and Knack 2001) finds that trust increases e…

In the United Kingdom, successive codes of best practice in corporate governance have highlighted the important role of outside or non-executive directors in ensuring that corporations are run for the benefit of their shareholders. While the first code of best practice, the 1992 Cadbury Report, recommended that there should be a sufficient number of non-executives on the board, the 2003 Higgs Report was much more prescriptive, recommending that there should be a majority of non-executives on the board (excluding the chairman). Similarly, U.S. regulation has been emphasizing the important role of independent or non-executive directors. More specifically, the NYSE and NASDAQ listing rules require companies to have a majority of independent directors. Despite many national regulators pushing for greater non-executive presence on boards, there are few academic studies finding evidence that a greater proportion of non-executives improve firm performance or value. Indeed, most studies do n…

The internet appendix for the paper entitled "Trust and Shareholder Voting" is available from here.