research

Research - Corporate Governance

Rigorous research methods are applied to understand the choice and performance consequences of corporate governance. The program examines governance issues by taking an in-depth and interdisciplinary look at the inner workings of corporate boards, regulators, institutional investors, consultants and others involved in the governance process.

Ongoing activities to study these issues include:

in-depth quantitative research
interactive forums and surveys to define and understand corporate governance, illuminating areas for additional research with leading corporations
academic roundtable discussions where leading researchers and academics gather to discuss governance issues that may provide a springboard for new research in corporate governance

development of corporate governance databases for researchers

Highlighted Research

	New research study entitled "Rating the Ratings: How Good Are Commercial Governance Ratings?"analyzes the merits of corporate governance ratings. Research Paper (Full text) Professor's David F. Larcker and Robert M. Daines research paper on commercial corporate governance ratings produced for 2005 by Audit Integrity, RiskMetrics (previously Institutional Shareholder Services), GovernanceMetrics International, and The Corporate Library indicate that the level of predictive validity for these ratings seems well below the threshold necessary to support the bold claims made for them. How Good Are Commercial Corporate Governance Ratings? Stanford GSB News, June 2008 Who's Watching the Watchdogs? Fortune, July 7, 2008
	New series of corporate governance teaching cases available List of new corporate governance cases and abstracts Highlighted Case Models of Corporate Governance: Who's the Fairest of Them All? Case No: CG-11; Publication Year: 2007; Author(s): David F. Larcker; Brian Tayan This case explores the various corporate governance systems that have been adopted in the United States and in various countries in Europe and Asia. The issues of control, director independence, auditor independence, dual-board versus unitary-board structure, comply-or-explain, and legislative versus market-driven solutions are explored. Readers are asked to evaluate what governance systems or elements they consider to be most effective. Plentiful examples--including Johnson & Johnson, BMW Group, Michelin, Heineken, Toyota, Samsung, Posco, PetroChina, Infosys, and many others--are used throughout as illustration. Link to all Business School cases
	10b5-1 Trading Plan Research - Professor Alan Jagolinzer New research conducted by Professor Alan Jagolinzer et. al. shows evidence that Rule 10b5-1 disclosure increases with firm litigation risk and insider strategic trade potential. Evidence also indicates that Rule 10b5-1 disclosure is associated with greater abnormal returns to insiders’ trades, especially for firms disclosing specific plan details. (May 2008) -Jagolinzer, Alan D., Henderson, M. Todd and Muller III, Karl A., "Scienter Disclosure," May 27, 2008. (Research Paper Abstract) Do SEC Rules on Insider Trading Really Protect? Securities and Exchange Commission Rule 10b5-1, designed to keep permitted insider trades from hurting others in the market, may not be achieving its goal, says Professor Alan Jagolinzer (June 2007). See the Media Mention's section for press coverage on this issue Jagolinzer, Alan D., "Sec Rule 10b5-1 and Insiders' Strategic Trade," September 17, 2007. (Research Paper Abstract)

New research study entitled "Rating the Ratings: How Good Are Commercial Governance Ratings?"analyzes the merits of corporate governance ratings.
Research Paper (Full text)

Professor's David F. Larcker and Robert M. Daines research paper on commercial corporate governance ratings produced for 2005 by Audit Integrity, RiskMetrics (previously Institutional Shareholder Services), GovernanceMetrics International, and The Corporate Library indicate that the level of predictive validity for these ratings seems well below the threshold necessary to support the bold claims made for them.

How Good Are Commercial Corporate Governance Ratings?
Stanford GSB News, June 2008

Who's Watching the Watchdogs?
Fortune, July 7, 2008

New series of corporate governance teaching cases available

List of new corporate governance cases and abstracts
Highlighted Case
Models of Corporate Governance: Who's the Fairest of Them All?
Case No: CG-11; Publication Year: 2007; Author(s): David F. Larcker; Brian Tayan

This case explores the various corporate governance systems that have been adopted in the United States and in various countries in Europe and Asia. The issues of control, director independence, auditor independence, dual-board versus unitary-board structure, comply-or-explain, and legislative versus market-driven solutions are explored. Readers are asked to evaluate what governance systems or elements they consider to be most effective. Plentiful examples--including Johnson & Johnson, BMW Group, Michelin, Heineken, Toyota, Samsung, Posco, PetroChina, Infosys, and many others--are used throughout as illustration.
Link to all Business School cases

10b5-1 Trading Plan Research - Professor Alan Jagolinzer

New research conducted by Professor Alan Jagolinzer et. al. shows evidence that Rule 10b5-1 disclosure increases with firm litigation risk and insider strategic trade potential. Evidence also indicates that Rule 10b5-1 disclosure is associated with greater abnormal returns to insiders’ trades, especially for firms disclosing specific plan details. (May 2008)

-Jagolinzer, Alan D., Henderson, M. Todd and Muller III, Karl A., "Scienter Disclosure," May 27, 2008. (Research Paper Abstract)

Do SEC Rules on Insider Trading Really Protect?
Securities and Exchange Commission Rule 10b5-1, designed to keep permitted insider trades
from hurting others in the market, may not be achieving its goal, says Professor Alan Jagolinzer
(June 2007). See the Media Mention's section for press coverage on this issue
Jagolinzer, Alan D., "Sec Rule 10b5-1 and Insiders' Strategic Trade," September 17, 2007.
(Research Paper Abstract)

Selected Books

	Roberts, D. John (2004). The Modern Firm: Organizational Design for Performance and Growth. Oxford: Oxford University Press Professor Robert's book was selected by The Economist on December 16th as the best book about business published in 2004: "The Modern Firm", written by John Roberts, an economics professor at Stanford Business School, lays out in wonderfully lucid and jargon-free language a framework for thinking about corporate structure, given that "any organization is multifaceted, and the range of organizational variables is mind-boggling". With an economist's discipline, the author introduces the reader as gently as possible to some demanding and stimulating ideas, ones that have already been tested by the likes of BP. (Article)

Roberts, D. John (2004). The Modern Firm: Organizational Design for Performance and Growth. Oxford: Oxford University Press

Professor Robert's book was selected by The Economist on December 16th as the best book about business published in 2004:

"The Modern Firm", written by John Roberts, an economics professor at Stanford Business School, lays out in wonderfully lucid and jargon-free language a framework for thinking about corporate structure, given that "any organization is multifaceted, and the range of organizational variables is mind-boggling". With an economist's discipline, the author introduces the reader as gently as possible to some demanding and stimulating ideas, ones that have already been tested by the likes of BP.
(Article)

Selected Cases - Corporate Governance (CG) and Accounting Related (A)

2008
Case No.	Topic	Author(s)
CG-12	Say On Pay...Does the Buck Stop Here?	David F. Larcker; Brian Tayan
CG-13	Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco and Whole Foods	David F. Larcker; Brian Tayan
CG-14	Executive Compensation: Moving from Utility Services to Power Trading at Aquila	David F. Larcker; Brian Tayan
A-198	Financial Restatements: Methods Companies Use to Distort Financial Performance	Madhav V. Rajan; Brian Tayan
CG-15 (in process)	Selecting a CEO: The Leader, the Business Builder, or the Technologist	David F. Larcker; Brian Tayan
2007
CG-05	Executive Compensation at Nabors Industries: Too Much, Too Little, or Just Right?	David F. Larcker; Brian Tayan
CG-06	Sovereign Bancorp and Relational Investors: The Role of the Activist Hedge Fund	David F. Larcker; Brian Tayan
CG-07	There's a New Sheriff in Town: Institutional Shareholder Services	David F. Larcker; Brian Tayan
CG-08	Corporate Governance Ratings: Got The Grade… What was the Test?	David F. Larcker; Brian Tayan
CG-09	Shareholder Democracy: Does Gretchen Get it Right?	David F. Larcker; Brian Tayan
CG-10	10b5-1 Plans: Mortgaging a Defense Against Insider Trading	David F. Larcker; Brian Tayan
CG-11	Models of Corporate Governance: Who's The Fairest of them all?	David F. Larcker; Brian Tayan
A193	Earnings Conference Calls: Hewlett-Packard Company	Maureen F. McNichols; Brian Tayan
A195	The Walt Disney Company: Investor Communications Strategy	Maureen F. McNichols; Brian Tayan
2006
CG-4A	Oracle's Hostile Takeover of PeopleSoft (A)	Robert M. Daines; Davina Drabkin; Vinay B Nair
CG-4B	PeopleSoft Finally Accepts Oracle's Offer (B)	Robert M. Daines; Davina Drabkin

Selected Publications

2008
Piotroski, Joseph D. and Darren T. Roulstone, "Evidence on the Nonlinear Relation between Insider Trading Decisions and Future Earnings Information," forthcoming 2008 in the Journal of Law, Economics, and Policy. (Abstract)
Daines, Robert, Gow, Ian D. and Larcker, David F., "Rating the Ratings: How Good are Commercial Governance Ratings?" June 26, 2008. Available at SSRN.
Armstrong, Chris S., Ittner, Christopher D. and Larcker, David F., "Economic Characteristics, Corporate Governance, and the Influence of Compensation Consultants on Executive Pay Levels," June 12, 2008, available at SSRN (Abstract)
Aboody, David and Kasznik, Ron, "Executive stock-based compensation and firms’ cash payout: the role of shareholders’ tax-related payout preferences," Review of Accounting Studies; forthcoming Sep2008, Vol. 13 Issue 2/3, p216-251. (Abstract)
Jagolinzer, Alan D., Larcker, David F. and Taylor, Daniel, "The Impact of the General Counsel on Corporate Governance," May 29, 2008. Available at SSRN. (Abstract)
Armstrong, Chris S., Jagolinzer, Alan D. and Larcker, David F., "Chief Executive Officer Equity Incentives and Accounting Irregularities," May 2008. Available at SSRN. (Abstract)
Piotroski, Joseph D. and Suraj Srinivasan, "Regulation and Bonding: The Sarbanes-Oxley Act and the Flow of International Listings," Journal of Accounting Research, May 2008, Volume 46, Issue 2, Page 383-425. (Abstract)
Core, John E., Wayne Guay, and David F. Larcker, "The Power of the Pen and Executive Compensation," Journal of Financial Economics, Amsterdam: April 2008. Vol. 88, Iss. 1; pg. 1. (Abstract)
Gilson, Ronald J. and Milhaupt, Curtis J., "Sovereign Wealth Funds and Corporate Governance: A Minimalist Response to the New Merchantilism," February 18, 2008, Available at SSRN. (Abstract)
2007
Ittner, C.D., Larcker, David F., and M. Pizzini, "Performance-Based Compensation in Professional Service Firms: An examination of medical group practices," Journal of Accounting and Economics, Dec 2007, Vol. 44 Issue 3, p300-327 (Abstract)
Larcker, David F. and Richardson, Scott A., "Corporate Governance, Accounting Outcomes and Organizational Performance," The Accounting Review, Oct 2007, Vol. 82 Issue 4, p963-1008, 46p (Abstract)
Jagolinzer, Alan D., "Sec Rule 10b5-1 and Insiders' Strategic Trade," September 17, 2007. Available at SSRN or DOI (Abstract)
Jagolinzer, Alan D., "Insider Trading," International Financial Law Review, London: August 2007. pg. 1 (Abstract)
Armstrong, Chris S., Jagolinzer, Alan D. and Larcker, David F., "Timing of Employee Stock Option Exercises and the Cost of Stock Option Grants," June 1, 2007. Available at SSRN. (Abstract)
Bergman, Nittai K, Jenter, Dirk, "Employee sentiment and stock option compensation,* Journal of Financial Economics, Amsterdam: June 2007. Vol. 84, Iss. 3; pg. 667 (Abstract)
Franco, Francesca, Ittner, Christopher D. and Larcker, David F., "The Effects of Contract Design and Implementation Practices on Worker Incentive Plan Outcomes", May 1, 2007. Available at SSRN. (Abstract)
Armstrong, Chris S., Larcker, David F. and Su, Che-Lin, "Stock Options and Chief Executive Officer Compensation," May 15, 2007. Available at SSRN. (Abstract)
Larcker, David F., and Rusticus, Tjomme O., "Endogeneity and Empirical Accounting Research," European Accounting Review, May 2007, Vol. 16 Issue 1, p207-215. (Abstract)
Jagolinzer, Alan D., Matsunaga, Steven R. and Yeung, Eric, "An Analysis of Insiders' Use of Prepaid Variable Forward Transactions," May 2007, Available at SSRN. (Abstract)
Larcker, David F. and Rusticus, Tjomme O., "Endogeneity and Empirical Accounting Research," European Accounting Review, Vol. 16, No. 1, pp. 207-215, May 2007. (Abstract)
2006
Wade, J., O'Reilly, C.A. and Pollock, T., "Overpaid CEOs and Underpaid Managers: Fairness and executive compensation," Organization Science, 2006.
Oyer, Paul and Scott Schaefer, "Costs of Broad-Based Stock Option Plans," Journal of Financial Intermediation, Volume 15, Issue 4, Pages 511-534, October 2006, (Abstract)
Hayes, Rachel M., Paul Oyer, and Scott Schaefer, "Co-Worker Complementarity and the Stability of Top Management Teams," Journal of Law, Economics, & Organization, Spring 2006, p.22. (Abstract)
O'Reilly, Charles, "Overpaid CEOs and Underpaid Managers: Fairness and Executive Compensation," Organization Science, 2006
Hayes, Rachel M., Oyer, Paul and Schaefer, Scott, "Coworker Complementarity and the Stability of Top-Management Teams," Journal of Law, Economics, and Organization, Vol. 22, No. 1, pp. 184-212, 2006. Available at SSRN.
Pfeffer, Jeffrey, "How to End CEO Pay Envy: Disclosing every detail of skyrocketing compensation packages is only making a bad situation worse. It's time to go back to keeping the numbers private," Business 2.0 Magazine, June 1, 2006.
Rajan, Madhav V. and Stefan Reichelstein, "Subjective Performance Indicators and Discretionary Bonus Pools," Journal of Accounting Research, June 2006, 585-618 (Abstract)
Greenstone, Michael, Paul Oyer and Annette Vissing-Jorgensen, "Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments," The Quarterly Journal of Economics, May 2006 (Abstract)

Selected Working and Research Papers

2008
Title (Paper No., Abstract)	Author(s)
"Scienter Disclosure," May 27, 2008. (Abstract)	Jagolinzer, Alan D., M. Todd Henderson, and Karl A. Muller III
CEO Turnover and Relative Performance Evaluation (1992)	Dirk Jenter; Fadi Kanaan
Firm specific governance of insiders' transactions, working paper 2008.	Jagolinzer, Alan D., Larcker David, F. and Dan Taylor
The Distribution of Insiders' Trades Around Earnings Announcements, working paper, 2008.	Jagolinzer, Alan D.
Shareholder Cross-holdings and Their Effect on Acquisition Decisions, working Paper, March 2008. (Abstract)	Jarrad Harford, Dirk Jenter and Kai Li
2007
The "Wall Street Walk" and Shareholder Activism: Exit as a Form of Voice (1918R2)	Anat R. Admati and Paul C. Pfleiderer
"Extreme Governance: An Analysis of Dual-Class Firms in the United States," working paper 2007. (Abstract)	Ishii, Joy, Metrick, Andrew and Paul Gompers
2006
Cross-Ownership, Returns, and Voting in Mergers (1921)	Gregor Matvos and Michael Ostrovsky
A Positive Theory Of Moral Management, Social Pressure, And Corporate Social Performance (1940)	David P. Baron
Managerial Contracting and Corporate Social responsibility (1945)	David P. Baron
Strategic Proxy Voting (1964)	Gregor Matvos and Michael Ostrovsky
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