Baruch Lev is a world class thinker on accountancy and
corporate operational matters. I have long admired his work and am very
much taken with his new book. Writing
from the view of corporate management, he recognizes the legitimacy of
corporate governance efforts and believes in the essential role that
shareholder activists can play in corporate - and societal - function. He writes,
"It's impossible to clarify all aspects of corporate
governance. In recent years, we've seen a huge amount of academic research on
the link between governance and performance. And the lessons from it
aren't always clear or consistent. But ignoring the debate on corporate
governance is not an option for managers. It's constantly in their face. Highly
visible commercial scorecards rank most US companies and many in Europe and
Asia on governance strength, and to lag your competitors in governance quality
is embarrassing. Moreover, perceived governance weaknesses invite distracting
shareholder proposals and proxy contests to rectify the alleged weaknesses such
as the 2008 highly publicized campaign of the Rockefeller descendents to strip
Exxon's chief of the board chairmanship. Furthermore, low governance ratings
often affect the recommendations of proxy advisors to mutual funds and other
institutional investors on how to vote on proxies and shareholder proposals.
And they may even affect the investment decisions of some institutions. And
pesky hedge funds often use governance deficiencies as a justification for
intervention in company affairs and demand for board and strategic changes."
Investors Over: Surprising Truths About Honesty, Earnings, Guidance and Other
Ways to Boost Your Stock Price by Baruch Lev (November 2011).
Read more blog posts on
corporate governance at the Robert A.G. Monks blog
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