Massachusetts Institute of Technology
Sign in | Create Account

The Future of Corporate Governance

10/07/2005 2:00 PM Kresge
Stewart C. Myers, Robert C. Merton (1970) Professor of Financial Economics,; MIT Sloan School of Management ; William F. Pounds, Professor Emeritus of Management; Dean Emeritus, MIT Sloan ; Adam Emmerich, Partner, Wachtell, Lipton, Rosen & Katz

Description: While they won't directly address headline-grabbing corporate swindles (Enron! Tyco! WorldCom!), these speakers are well aware of the turmoil roiling away in boardrooms these days. William Pounds, long an insider within the top tiers of corporate life, makes a case that improving governance means having "the most appropriate and effective chief executive officer in place in every corporation." All the things we're concerned about, "integrity, transparency, high quality professional performance," will fall into place if the right person occupies this central role. And don't count on regulations and hard work by committees "to protect shareholders and employees from disappointment if the wrong person sits on top," says Pounds. But the process of attracting the best candidate, the job of corporate boards, is tricky. Plus, says Pounds, we don't really understand how boards work as organizations, so establishing best practices for recruiting and evaluating CEOs will require some serious research and data collection _ a good assignment for business students.

In Adam Emmerich's very long view, which begins as early as the British East India Company, today's business scandals represent mere bumps in the road for corporate governance. The modern corporation got its start in the 17th century, according to Emmerich, and the key notions of corporate governance have been in place since around 1911. There's "an economic logic to corporate organization," he says, which makes it a "very good system," and one that's been very stable. The most recent changes in governance emerged as reaction to the takeover wave of the 1980s, when courts compelled boards to take a more active and restraining role with CEOs. And the Sarbanes-Oxley law accelerates the trend of more active boards. But, wonders Emmerich, "does the enhanced degree of interaction between a board and CEO lead to a more effective CEO? Currently, the zeitgeist says we're not worried about an effective CEO but about a dishonest CEO." Emmerich conjectures that greater board activism might lead to less efficient public companies. He also notes a corollary trend of activism among large shareholders, including, hedge fund managers, and he perceives the possibility for conflicts of interest.

Host(s): Sloan School of Management, MIT Sloan School of Management

Comments (1)

insert here

Posted 1 year by Anonymous 00:00:40

You need to log in, in order to post comments. If you don’t have an account yet, sign up now!

MIT World — special events and lectures

MIT World — special events and lectures

Category: Events | Updated almost 3 years ago

Created
December 12, 2011 20:51
Category
Tags
License
All Rights Reserved (What is this?)
Additional Files


Viewed
2579 times

More from MIT World — special events and lectures

20"Ton Canaries: The Great Whales of the North Atlantic  (panel)

20"Ton Canaries: The Great Whales o...

Added almost 3 years ago | 01:06:00 | 3207 views

Design for Fun: What Makes a Game Good, and a Good Game?

Design for Fun: What Makes a Game G...

Added almost 3 years ago | 00:43:53 | 2699 views

Earth Systems Engineering and Management

Earth Systems Engineering and Manag...

Added almost 3 years ago | 00:52:12 | 2614 views

The U.S. Energy Crisis and the Role of New Nuclear Plants

The U.S. Energy Crisis and the Role...

Added almost 3 years ago | 01:31:00 | 1571 views

How Can Communities, Cities and Regions Recover From Disaster?

How Can Communities, Cities and Reg...

Added almost 3 years ago | 01:55:00 | 1756 views

Challenges in Nation Building

Challenges in Nation Building

Added almost 3 years ago | 01:23:00 | 5467 views