Corporate Governance Matters

Preface xv Chapter 1 Introduction to Corporate Governance 1 Chapter 2 International Corporate Governance 23 Chapter 3 Board of Directors: Duties and Liability 67 Chapter 4 Board of Directors: Selection, Compensation, and Removal 93 Chapter 5 Board of Directors: Structure and Consequences 127 Chapter 6 Organizational Strategy, Business Models, and Risk Management 169 Chapter 7 Labor Market for Executives and CEO Succession Planning 203 Chapter 8 Executive Compensation and Incentives 237 Chapter 9 Executive Equity Ownership 287 Chapter 10 Financial Reporting and External Audit 325 Chapter 11 The Market for Corporate Control 361 Chapter 12 Institutional Shareholders and Activist Investors 393 Chapter 13 Corporate Governance Ratings 433 Chapter 14 Summary and Conclusions 459 Index 467

David Larcker is James Irvin Miller Professor of Accounting at the Graduate School of Business of Stanford University; Director of the Corporate Governance Research Program; Senior Faculty, Arthur and Toni Rembe Rock Center for Corporate Governance. David's research focuses on executive compensation, corporate governance, and managerial accounting. He has published many research papers and is frequently quoted in both the popular and business press. He received his BS and MS in engineering from the University of Missouri-Rolla and his PhD in business from the University of Kansas. He previously was on the faculty of the Kellogg Graduate School of Management at Northwestern University and The Wharton School at the University of Pennsylvania. Professor Larcker presently serves on the Board of Trustees for the Wells Fargo Advantage Funds. Brian Tayan is a member of the Corporate Governance Research Program at the Stanford Graduate School of Business. He has written broadly on the subject of corporate governance, including case studies and other materials on boards of directors, succession planning, executive compensation, financial accounting, and shareholder relations. Previously, Brian worked as a financial analyst at Stanford University's Office of the CEO and as an investment associate at UBS Private Wealth Management. He received his MBA from the Stanford Graduate School of Business and his BA from Princeton University. Together, Larcker and Tayan have co-authored many case studies and articles on governance. Additional resources and supporting material for this book are available at: Stanford Graduate School of Business The Corporate Governance Research Program www.gsb.stanford.edu/cgrp/