Research by the Corporate Governance Research Initiative

The SEC adopted Rule 10b5-1 to provide an affirmative defense against allegations of insider trading to executives whose jobs regularly expose them to material nonpublic information. In this Closer Look, we present evidence on the trading…

Environmental costs are a legal obligation of companies and proper corporate governance requires that they be dealt with responsibly. Unfortunately, disturbing examples exist where companies have taken aggressive action to separate their…

Scrutiny of CEO pay increases during times of economic stress, when it is not clear how much pay CEOs should receive when corporate profitability suffers due to an unforeseen decline in the operating environment. On the one hand, the board might…

Our concept of risk continues to broaden and now includes instances in which representatives of a company make statements, actions, or decisions that damage the firm by inviting public scrutiny, sparking a reaction among customers, employees,…

Investors rely on corporate disclosure to make informed decisions about the value of companies they invest in. The COVID-19 pandemic provides a unique opportunity to examine disclosure practices of companies relative to peers in real time about a…

There has been a broad push in recent years to increase diversity at the board and CEO levels of public corporations. Despite this effort, diversity on boards and in senior leadership positions has not reached the levels to which advocates aspire…

Little is known about the process by which pre-IPO companies select independent, outside board members — directors unaffiliated with the company or its investors. Private companies are not required to disclose their selection criteria or process…

Corporate executives receive a considerable portion of their compensation in the form of equity and, from time to time, sell a portion of their holdings in the open market. Executives nearly always have access to nonpublic information about the…

Among the controversies in corporate governance, perhaps none is more heated or widely debated across society than that of CEO pay. The views that American citizens have on CEO pay is centrally important because public opinion influences…

A reliable system of corporate governance is considered to be an important requirement for the long-term success of a company. Unfortunately, after decades of research, we still do not have a clear understanding of the factors that make a…

Currently, there is much debate about the role that non-investor stakeholder interests play in the governance of public companies. Critics argue that greater attention should be paid to the interest of stakeholders and that by investing in…

Recently, there has been debate among corporate managers, board of directors, and institutional investors around how best to incorporate ESG (environmental, social, and governance) factors into strategic and investment decision-making processes.…

Two decades ago, McKinsey advanced the idea that large U.S. companies are engaged in a “war for talent” and that to remain competitive they need to make a strategic effort to attract, retain, and develop the highest-performing executives. To…

In this Closer Look, we examine the tensions between corporate culture, financial incentives, and employee conduct as illustrated by the Wells Fargo cross-selling scandal. In 2016, Wells Fargo admitted that employees had opened as many as 2…

Companies are required to have a reliable system of corporate governance in place at the time of IPO in order to protect the interests of public company investors and stakeholders. Yet, relatively little is known about the process by which they…

CEO activism — the practice of CEOs taking public positions on environmental, social, and political issues not directly related to their business — has become a hotly debated topic in corporate governance. To better understand the implications of…

Companies in the United States are staying private longer, and this trend has important implications for companies and their employees. Employees holding equity awards in private companies are restricted from monetizing an illiquid asset that…

The hallmark of good corporate governance is an independent board of directors to oversee management. However, it is not clear that independent directors receive the information they need to make fully informed decisions on all key matters.…

Proxy advisory firms have significant influence over the voting decisions of institutional investors and the governance choices of publicly traded companies. However, it is not clear that the recommendations of these firms are correct and…

In this Closer Look, we examine the roles that leadership and culture play in contributing to chronic misbehavior and the manner in which it takes root in an organization. We use the example of Uber Technologies. Between 2012 and 2017, Uber…

The board of directors is expected to ensure that management has identified and developed processes to mitigate risks facing the organization, including risks arising from data theft and the loss of information. Unfortunately, recent experience…

Board members rely on information provided by management to inform their decisions. Unfortunately, some research calls into question the adequacy of the information the board members receive and, by extension, the quality of decisions they are…

Governance experts have vigorously debated the appropriateness of CEO compensation. And yet, very little effort has been made to understand the size, quality, and efficiency of the labor market for CEO talent, which is a key determinant of pay.…

CEO succession at many companies occurs in a black box. Shareholders are not privy to boardroom discussions prior to the announcement of a CEO departure, and press releases announcing the change contain boilerplate language that does not make it…