The accounting standardization project, kicked off by the passage of U.S. securities laws in the 1930s, has steadily gained momentum over seven decades. Today, written standards dominate accounting thought, practice, regulation, instruction, even research. Generally accepted accounting principles - originally a mere description in its plain English meaning - have since been capitalized into a proper name - Generally Accepted Accounting Principles - and now describes rules and regulations issued by authorities with power to inflict punishment on those who do not to accept them. How and why did financial reporting get caught in the standardization project, replacing norms of corporate and professional behaviour by written rules and standards? What are the consequences of this transformation? What alternative courses are available to accounting and corporate governance? I argue that heavy reliance on the codification of financial reporting has been a wrong path. A shift from rules towards norms of behaviour may yet help accounting and corporate governance recover a better balance.
{"title":"Minding Our Manners: Accounting as Social Norms","authors":"S. Sunder","doi":"10.2139/ssrn.733743","DOIUrl":"https://doi.org/10.2139/ssrn.733743","url":null,"abstract":"The accounting standardization project, kicked off by the passage of U.S. securities laws in the 1930s, has steadily gained momentum over seven decades. Today, written standards dominate accounting thought, practice, regulation, instruction, even research. Generally accepted accounting principles - originally a mere description in its plain English meaning - have since been capitalized into a proper name - Generally Accepted Accounting Principles - and now describes rules and regulations issued by authorities with power to inflict punishment on those who do not to accept them. How and why did financial reporting get caught in the standardization project, replacing norms of corporate and professional behaviour by written rules and standards? What are the consequences of this transformation? What alternative courses are available to accounting and corporate governance? I argue that heavy reliance on the codification of financial reporting has been a wrong path. A shift from rules towards norms of behaviour may yet help accounting and corporate governance recover a better balance.","PeriodicalId":221915,"journal":{"name":"CGA: Regulations & Standards for Corporate Reporting & Governance (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2005-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122282532","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Corporate governance - and executive - compensation arrangements in particular - should be an important component of the agenda to reform the housing GSEs. The GSEs' safety-and-soundness regulator - who is essentially the debtholders' and taxpayers' representative - must be admitted to the GSEs' boardroom in a way that is atypical of an ordinary publicly held company. This intrusion into the board's oversight of executive-compensation plans is justified given the GSEs' public purposes and their large potential cost to taxpayers. Prudent public policy requires greater supervisory control over executive compensation at the GSEs, which would follow a precedent set in banking.
{"title":"Executive Compensation at Fannie Mae and Freddie Mac","authors":"William. R. Emmons, Gregory Sierra","doi":"10.2139/SSRN.678404","DOIUrl":"https://doi.org/10.2139/SSRN.678404","url":null,"abstract":"Corporate governance - and executive - compensation arrangements in particular - should be an important component of the agenda to reform the housing GSEs. The GSEs' safety-and-soundness regulator - who is essentially the debtholders' and taxpayers' representative - must be admitted to the GSEs' boardroom in a way that is atypical of an ordinary publicly held company. This intrusion into the board's oversight of executive-compensation plans is justified given the GSEs' public purposes and their large potential cost to taxpayers. Prudent public policy requires greater supervisory control over executive compensation at the GSEs, which would follow a precedent set in banking.","PeriodicalId":221915,"journal":{"name":"CGA: Regulations & Standards for Corporate Reporting & Governance (Topic)","volume":"61 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122945509","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2004-01-01DOI: 10.1111/J.1467-8683.2004.00347.X
Ian P. Dewing, Peter O. Russell
This paper explores current debates and trends in regulation and examines their relevance to the evolution of UK corporate governance codes of practice. In particular, the paper explores frameworks drawn from the regulation of financial services, accounting and audit, and discusses whether there are lessons to be learnt from them for the regulation of UK corporate governance. Because of trends in regulation, and in the light of empirical evidence and recent events, especially post-Enron, an appropriate structure for the regulation of UK corporate governance might be based on that of financial services.
{"title":"Regulation of UK Corporate Governance: Lessons from Accounting, Audit and Financial Services","authors":"Ian P. Dewing, Peter O. Russell","doi":"10.1111/J.1467-8683.2004.00347.X","DOIUrl":"https://doi.org/10.1111/J.1467-8683.2004.00347.X","url":null,"abstract":"This paper explores current debates and trends in regulation and examines their relevance to the evolution of UK corporate governance codes of practice. In particular, the paper explores frameworks drawn from the regulation of financial services, accounting and audit, and discusses whether there are lessons to be learnt from them for the regulation of UK corporate governance. Because of trends in regulation, and in the light of empirical evidence and recent events, especially post-Enron, an appropriate structure for the regulation of UK corporate governance might be based on that of financial services.","PeriodicalId":221915,"journal":{"name":"CGA: Regulations & Standards for Corporate Reporting & Governance (Topic)","volume":"150 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122760320","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper was presented to generate debate about proposals developed by a 'Corporate Governance Council' set up by the Australian Stock Exchange (ASX) to advise on new guidelines. The paper identifies the invalidity of the assumptions implicit in the Sarbanes-Oxley Act in the US and the recommendations of the Higgs report in the UK into the role of non-executive directors. The paper describes how these assumptions lack validity in regards to the ability of non-executives directors, who meet the highest standards of independence, being able to protect themselves, the company, shareholders, or other stakeholders. Likewise, the invalidity of the assumption that an auditor can be independent when paid by those they audit. Another fundamental flaw in unitary governance is that the information on which directors rely for monitoring and evaluating the business and its management is provided by management. This widespread arrangement is inconsistent with directors performing their fiduciary role with due diligence and vigilance. A contributing factor to the lack of shareholder engagement to control boards is explained by the unethical but legal practice of a director controlling the process of a board being made accountable by chairing shareholder meetings. Lack of shareholder regulation in Australia also arises from corporations having the power to veto pension fund management mandates and a bank based oligarchy of corporate fund management and influence. While Australia leads the world with its requirement that corporations continuously disclose price sensitive information, the identity of share traders and shareholders, that can also be price sensitive information, is not required to be disclosed at the time of a trade, and this protect and so facilitates insider trading. Ways of ameliorating all these problems are suggested in the paper based on the analysis and recommendations presented in A New Way to Govern: Organisations and Society after Enron archived at http://ssrn.com/abstract=319867
{"title":"A New Way to Govern: Because 'World Best Practices' are the Problem Not the Solution","authors":"S. Turnbull","doi":"10.2139/SSRN.386740","DOIUrl":"https://doi.org/10.2139/SSRN.386740","url":null,"abstract":"This paper was presented to generate debate about proposals developed by a 'Corporate Governance Council' set up by the Australian Stock Exchange (ASX) to advise on new guidelines. The paper identifies the invalidity of the assumptions implicit in the Sarbanes-Oxley Act in the US and the recommendations of the Higgs report in the UK into the role of non-executive directors. The paper describes how these assumptions lack validity in regards to the ability of non-executives directors, who meet the highest standards of independence, being able to protect themselves, the company, shareholders, or other stakeholders. Likewise, the invalidity of the assumption that an auditor can be independent when paid by those they audit. Another fundamental flaw in unitary governance is that the information on which directors rely for monitoring and evaluating the business and its management is provided by management. This widespread arrangement is inconsistent with directors performing their fiduciary role with due diligence and vigilance. A contributing factor to the lack of shareholder engagement to control boards is explained by the unethical but legal practice of a director controlling the process of a board being made accountable by chairing shareholder meetings. Lack of shareholder regulation in Australia also arises from corporations having the power to veto pension fund management mandates and a bank based oligarchy of corporate fund management and influence. While Australia leads the world with its requirement that corporations continuously disclose price sensitive information, the identity of share traders and shareholders, that can also be price sensitive information, is not required to be disclosed at the time of a trade, and this protect and so facilitates insider trading. Ways of ameliorating all these problems are suggested in the paper based on the analysis and recommendations presented in A New Way to Govern: Organisations and Society after Enron archived at http://ssrn.com/abstract=319867","PeriodicalId":221915,"journal":{"name":"CGA: Regulations & Standards for Corporate Reporting & Governance (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123265609","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In February 1998 the Italian Government passed an Act reforming the law on financial services, stock exchanges and listed companies. With regard to listed companies, the reform was intended to strengthen minority shareholders' rights. The idea behind the new rules on corporate governance was that active institutional investors would make use, if necessary, of these rights in their monitoring of listed companies. A reduction of the agency costs stemming from the separation between ownership and control in listed companies would follow, with beneficial effects for shareholders' wealth and for the Italian economy as a whole. This paper tries to answer two questions: first, whether the changes in the law resulting from the 1998 reform encourage institutional investor activism in Italy; and second, whether, legal rules aside, it is reasonable to expect significant institutional investor activism in Italy. We provide, then, both an empirical analysis of the factors affecting institutional investor activism in Italy and a legal analysis of the most relevant changes in the Italian mutual funds and corporate laws, following the 1998 reform. The former analysis shows that institutional shareholdings and investment strategies are compatible with the hypothesis that institutional investors can play a significant role in the corporate governance of Italian listed companies. However, a curb to their playing such an active role may derive from the predominance of mutual fund managers belonging to banking groups (giving rise to conflicts of interest) and from the prevailing ownership structure of listed companies, which are still dominated by controlling shareholders holding stakes higher than, or close to, the majority of the capital (implying a weaker bargaining power of institutions vis-a-vis controllers). The analysis of the legal changes prompted by the 1998 financial markets and corporate law reform indicates that the legal environment is now definitely more favorable to institutional investor activism than before. However, the Italian legal environment proves still to be little favorable to institutional investor activism, when compared to that of the U.S. or the U.K.
{"title":"Corporate Governance in Italy after the 1998 Reform: What Role for Institutional Investors?","authors":"Marc Bianchi, L. Enriques","doi":"10.2139/SSRN.203112","DOIUrl":"https://doi.org/10.2139/SSRN.203112","url":null,"abstract":"In February 1998 the Italian Government passed an Act reforming the law on financial services, stock exchanges and listed companies. With regard to listed companies, the reform was intended to strengthen minority shareholders' rights. The idea behind the new rules on corporate governance was that active institutional investors would make use, if necessary, of these rights in their monitoring of listed companies. A reduction of the agency costs stemming from the separation between ownership and control in listed companies would follow, with beneficial effects for shareholders' wealth and for the Italian economy as a whole. This paper tries to answer two questions: first, whether the changes in the law resulting from the 1998 reform encourage institutional investor activism in Italy; and second, whether, legal rules aside, it is reasonable to expect significant institutional investor activism in Italy. We provide, then, both an empirical analysis of the factors affecting institutional investor activism in Italy and a legal analysis of the most relevant changes in the Italian mutual funds and corporate laws, following the 1998 reform. The former analysis shows that institutional shareholdings and investment strategies are compatible with the hypothesis that institutional investors can play a significant role in the corporate governance of Italian listed companies. However, a curb to their playing such an active role may derive from the predominance of mutual fund managers belonging to banking groups (giving rise to conflicts of interest) and from the prevailing ownership structure of listed companies, which are still dominated by controlling shareholders holding stakes higher than, or close to, the majority of the capital (implying a weaker bargaining power of institutions vis-a-vis controllers). The analysis of the legal changes prompted by the 1998 financial markets and corporate law reform indicates that the legal environment is now definitely more favorable to institutional investor activism than before. However, the Italian legal environment proves still to be little favorable to institutional investor activism, when compared to that of the U.S. or the U.K.","PeriodicalId":221915,"journal":{"name":"CGA: Regulations & Standards for Corporate Reporting & Governance (Topic)","volume":"133 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2001-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124138045","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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