PROF. MARC GOERGEN ON CORPORATE GOVERNANCE

Wall Street tries to weed out the wolves while London stays sheepish By Marc Goergen , Cardiff University When Mathew Martoma, the former portfolio manager of SAC Capital, was sentenced to nine years in prison for insider trading last week, much of the comment was about how harsh the punishment looked. It must have seemed particularly so to traders in the dealing rooms of light-touch London. In truth, Martoma should take some of the blame. Federal court judge Paul Gardephe justified the length of the sentence by the exceptionally high gains that he had made from this deal, his lack of repentance and his refusal to co-operate with the authorities. Martoma had been dealing on non-public information he had received from a doctor about clinical trials of a new Alzheimer’s drug. He received the private information on a Sunday in July 2008. The next day, SAC Capital sold its $700m stake in US-based Wyeth Pharmaceuticals and Irish Élan Corporation , the two joint developers of the...

The questions below are taken from the supplementary material accompanying my book International Corporate Governance . The supplementary material is available from here for university teachers. How much do you know about corporate governance? » Create A Quiz

The highly acclaimed textbook  International Corporate Governance  has now been published in a Chinese translation by  China Machine Press . The book is available from Amazon China . The original English version was published by Pearson Education  and is available in print as well as via Kindle  and CourseSmart . Endorsements on the back cover: 'An excellent textbook which truly stands out. It is better than any book on corporate governance that I have seen',  Luc Renneboog, Tilburg University 'Marc Goergen's book on corporate governance is by far the best textbook that has been published on the topic. He has done a wonderful job of covering the topics from a global perspective and I strongly recommend it to all scholars and students with an interest in corporate governance',  Franklin Allen, Wharton School, University of Pennsylvania 'An excellent and very comprehensive book. It should become a standard reference on corporate gove...

Please click on the following diagrams to see them in their full size. The full study was published in the Journal of Corporate Finance  and can be found here . A pre-publication version of the same study is available from the SSRN website . See also my blog on the Cadbury Code which refers to above study. Chapter 14 of International Corporate Governance  reviews corporate governance issues pertaining to initial public offerings. Legal disclaimer: This blog reflects my personal opinion and not necessarily that of my employer. Any links to external websites are provided for information only and I am neither responsible nor do I endorse any of the information provided by these websites.  

There is a well established literature in economics (see e.g. the study by  Stephen Knack and Philip Keefer ) which shows that country level trust increases economic performance, as measured by GDP growth. These studies measure country trust by the percentage of respondents from the World Values Survey  who agree that "most people can be trusted"; the alternative being that one "need[s] to be very careful when dealing with people".  When it comes to what drives country trust, the literature is somewhat less consistent. Broadly speaking however, country trust is negatively affected by income inequality, ethno-linguistic diversity and the importance of hierarchical religions. Contradicting the "trickle-down" wealth effect, this literature finds that income inequality is bad for economic wealth, via the decrease in country trust which in turn hurts economic growth. Ethno-linguistic diversity is normally measured by the probability that two randomly selec...

Sometimes following so called  best practice  in corporate governance is just not good enough. Or what is currently best practice at the national level could not even be deemed to be good. This might be the case for firms based in emerging markets where corporate governance regulation is weak and the regulation that exists is not necessarily enforced. However, even some firms from developed economies, with relatively stringent regulation and good law enforcement, may feel that their national corporate governance standards are not good enough.  In 2007, while holding a chair in finance at Sheffield University, I organised a conference on contractual corporate governance  with the help of  Prof. Luc Renneboog  from Tilburg University. We defined contractual corporate governance as The ways and means by which individual companies can deviate from their national corporate governance standards by increasing (or reducing) the level of protection they offe...

In February, I wrote a blog about the UK approach to corporate governance , which started with the Cadbury code. I argued that we need to review the UK approach as it is not enough evidence based. A few years ago, I organised a conference on corporate governance at Cardiff Business School . One of the participants, one of the authors of an important review of UK corporate governance which was commissioned by the UK government, expressed utter surprise at the fact that there was indeed research being conducted on corporate governance. It seems weird that policy makers and executives have so little awareness and knowledge of corporate governance research, which by its very nature is highly practice oriented and often also has important policy implications. Why would this be the case? Imagine that your general practitioner (GP) refuses to keep up with recent developments in medical research. What would be your reaction? You would very likely lose confidence in your GP and try to find a...