Research by the Corporate Governance Research Initiative

This case examines seven commonly accepted myths about corporate governance. How can we expect managerial behavior and firm performance to improve, if practitioners continue to rely on myths rather than facts to guide their decisions?

This case examines seven commonly accepted myths about executive compensation. Public perception is that executives are overpaid and that compensation contracts are not structured in the best interest of shareholders. Why don’t experts rely on…

This case study examines prominent features of the governance system of Tesla Motors, as it has evolved from inception to IPO. Now that Tesla is public, how is its governance likely to change in the future?

The recommendations of Institutional Shareholder Services are influential in the proxy voting process, particularly in matters relating to equity compensation and exchange offers. What evidence is there that these recommendations increase…

In 2011, David Sokol, CEO of Berkshire Hathaway’s energy subsidiary, purchased $10 million of Lubrizol stock days before recommending that Berkshire Hathaway acquire the firm. Did Sokol’s actions reflect a broad governance failure for the firm?…

In recent years, much attention has been paid to CEO succession planning as a risk management issue, particularly at companies whose CEOs are experiencing health issues. How much information should the company disclose on the health of the CEO?…

This case is a follow up to HR-29A, and explains the actions taken by Keller Williams in response to the residential real estate market downturn in 2008 and 2009. The case explains the programs and initiatives put in place by the company to boost…

Proxy advisory and corporate governance rating firms (such as RiskMetrics/Institutional Shareholder Services, Governance Metrics International, and The Corporate Library) play an increasingly important role in U.S. public markets. They rank the…

Some executives who accumulate a substantial ownership position in the company hedge or pledge their shares to limit their financial risk. Should the board of directors allow this to occur?

In recent years, there has been considerable debate as to whether CEO compensation is actually correlated with performance in U.S. companies. Why don’t shareholders and stakeholders examine the relation between CEO wealth and stock price to…

A director’s social and professional network contributes many positive benefits that increase shareholder value. Why isn’t more attention paid to the relation between personal networks and governance quality?

In recent years, there has been a proliferation of non-GAAP metrics to supplement audited financial statements. Are these adjustments being made for the benefit of shareholders, or to distort financial results?

The two major paradigms in the theoretical agency literature are moral hazard (i.e., hidden action) and adverse selection (i.e., hidden information). Prior research typically solves these problems in isolation, as opposed to simultaneously…

Linguists and psychologists have developed techniques to identify deceptive language and behavior. Why don’t shareholders use these same techniques to evaluate the truthfulness of management and detect financial manipulation?

In recent years, there has been considerable controversy about whether shareholders should be able to nominate candidates to serve on the board of directors. What impact would proxy access have on director elections? Would it improve or impair…

More than half of companies today cannot immediately name a successor to their CEO should the need arise, according to new research conducted by Heidrick & Struggles and Stanford…

One of the most important decisions that a board of directors must make is the selection of the CEO. What type of disclosure can provide shareholders with insight into succession planning?

Compensation and disclosure have grown very complex over time. Is this complexity necessary? Should it be simplified?

Experts place considerable emphasis on the board structure. Many boards now look indistinguishable, and yet can differ very much in terms of oversight quality. Has an emphasis on board structure led to a decrease in board quality?

The governance structure of Berkshire Hathaway is remarkably different from that of other corporations, and most of its features do not conform to the “best practices” recommended by experts. Why is this an important exception, and what can it…

This study examines whether Chief Executive Officer (CEO) equity-based holdings and compensation provide incentives to manipulate accounting reports. While several prior studies have examined this important question, the empirical evidence is…

In recent years, RiskMetrics has played an influential role in the proxy voting process. Several companies, however, are critical of the methodology it uses to inform its recommendations, particularly with regards to equity compensation. Is it…

Instrumental variable (IV) methods are commonly used in accounting research (e.g., earnings management, corporate governance, executive compensation, and disclosure research) when the regressor variables are endogenous. While IV estimation is the…