In Closer Look, we highlight significant “holes” in our knowledge of corporate governance. These are central issues where insufficient or inadequate study has left us unable to answer basic questions, and where key assumptions relied upon by experts have not been verified or validated. While the concepts we review are not exhaustive, each is critical to our understanding of the proper functioning of governance, including board oversight, the recruitment of CEO talent, the size and structure of CEO pay, and the advancement of shareholder and stakeholder welfare.
- What practices make a board effective?
- What are the real factors that determine whether a director is “independent?”
- How scarce is CEO talent, and how efficient is the labor market for CEOs?
- How much value is a CEO directly responsible for creating and how much pay should they be offered?
- Are companies currently aligning pay and performance in the right way?
- Does the composition of a company’s shareholder base influence the decisions the board and management make?
- What role should stakeholder needs play in corporate decision making? Would outcomes improve (or be worse) if more investment were made toward ESG?